CFA Practice Question
A firm intends to take on a significant amount of new debt in order to fund the purchase of a close competitor. However, the firm cannot complete the transaction unless it first calls one of its outstanding bond issues. It must be true that the called bonds ______
A. have a higher interest rate than the new bonds will.
B. can be called at a price that is very near par.
C. have covenants which restrict such increase in debt.
User Contributed Comments 2
| User | Comment |
|---|---|
| gill15 | If the answer C was not an issue.... A ---- would be true right? I'm assuming C just overides A.. |
| rjdelong | The word MUST in the question made me choose C over A. A is not a MUST. |