CFA Practice Question

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CFA Practice Question

The main cause of a call is:

A. A decline in interest rates.
B. A rise in interest rates.
C. Interest rates stay flat for a long time.
Correct Answer: A

If interest rates have declined since a company first issued the bonds, it will likely want to refinance this debt at a lower rate of interest. In this case, company will call its current bonds and reissue them at a lower rate of interest.

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