Firms that issue callable bonds have the option of repaying the principal to the bond buyers before the stated maturity date for the bonds. Firms may call their bonds before maturity in order to avoid making some of the coupon payments
Should we expect the price of a callable bond to be higher or lower than the price of a non-callable bond that has the same coupon payment, principal, and effective yield? A) Price of the callable bond should be higher
B) Price of the bonds should be the same
C) Price of the callable bond should be lower
D) We need to know the year in which the bond is called in order to compare the prices
C
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When a country goes to the IMF for foreign currencies to stabilize its own currency, it enages with the IMF in a(n)
a. one-time-only grant from the IMF b. purchase-and-resale (of that currency) agreement c. agreement concerning import controls that is administered jointly by the IMF and the country d. exchange control agreement that is the prerogative of the IMF alone e. agreed upon devaluation
The opportunity cost of building a park in your hometown would be the
a. money cost of constructing the park. b. highest valued bundle of other goods and services that must be forgone because of the park construction. c. necessary increase in tax revenues to finance the construction. d. amount of time spent in leisure activities in the park once it is constructed.