Question

When are issuers more likely to call an outstanding bond issue

Answer 1

When interest rates are lower than they were when the bonds were issued

Explanation:

Answer 2

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

When interest rates are lower than they were when the bonds were issued.

When would an issuer call a bond?

An issuer may choose to call a bond when current interest rates drop below the interest rate on the bond. That way the issuer can save money by paying off the bond and issuing another bond at a lower interest rate. This is similar to refinancing the mortgage on your house so you can make lower monthly payments.

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