Question

When are issuers more likely to call an outstanding bond issue?

A) When interest rates rise
B) When market demand is low
C) When the economy is booming
D) When the issuer faces bankruptcy

Answer 1

Issuers are more likely to call an outstanding bond issue when the economy is booming or when market demand is low.

Step-by-step explanation:

When it comes to calling an outstanding bond issue, issuers are more likely to do so when the economy is booming or when market demand is low. A booming economy generally means that the issuer is able to generate higher profits, making it more likely that they can repay the loan. On the other hand, when market demand is low, the issuer may choose to call the bond issue in order to refinance at a lower interest rate.