A call provision gives bondholders the right to demand, or "call for," the repayment of a bond. Typically, calls are exercised if interest rates rise, because when rates rise the bondholder can get the principal amount back and reinvest it elsewhere at higher rates.?
Answer the following statement true (T) or false (F)
False
A call provision gives the issuing firm the right to “call in” the bonds for redemption prior to maturity. 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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