If a bond is callable and if interest rates in the economy decline, then the company can sell a new issue of low-interest-rate bonds and use the proceeds to "call" the old bonds in and have effectively refinanced at a lower rate.?
Answer the following statement true (T) or false (F)
True
Call provisions allow firms to refinance debt, much as individuals might refinance mortgages on their houses: when interest rates decline, firms can recall (refund) high-cost debt that is outstanding and replace it with new, lower-cost debt. See 6-1: Characteristics and Types of Debt
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