Question

issued callable bonds. The bonds are most likely to be called if A. Allstate Insurance needs additional financing. B. Allstate Insurance stock price increases dramatically. C. interest rates increase. D. interest rates decrease.

Answer 1

D. interest rates decrease.

Step-by-step explanation:

As the callable bond allows the bond holder to call these bonds when they require or after a specific period of time or on a condition attached. The Decrease in Interest rate will increase the value of the bond because decrease in the interest rate will increase the present value of the future cash flows associated with the bond. So, the Allstate Insurance takes the benefit of increase in the value of the bond.