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Which of the following factors will increase the likelihood that a company will call its outstanding bonds?

JaimeD asked:


a. An increase in the yield to maturity on the company’s outstanding bonds.

b. An increase in the call price of the outstanding bonds.

c. A reduction in the flotation costs associated with issuing new bonds.

d. Both a and c are correct

e. None are correct.

This entry was posted on Sunday, November 16th, 2008 at 8:36 am and is filed under Bonds. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Which of the following factors will increase the likelihood that a company will call its outstanding bonds?”

  1. I would say d…given that the information given is light and I would have to assume alot. The main 3 issues why companies call bonds are:

    1. Interest rates have lowered and can now have a new issue to cover the old and pay less interest
    2. The company has excess cash and no better current investment to invest in- so lowering debt number and payments help get access to future leverage
    3. It is a requirement before another company buys it

    hope that is close enough

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