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A call provision gives bondholders the right to demand, or "call for," repayment of a bond. Typically, calls are exercised if interest rates rise, because when rates rise the bondholder can get the principal amount back and reinvest it elsewhere at higher rates.A) TrueB) False

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jepessoa

Answer:

B) False

Explanation:

A call provision gives the bond's issuer (the corporation that initially sold the bonds) the right to demand or call the bonds. Call provisions are clauses included in the contracts by which bonds are issued and they grant the issuer the right to buy back the bonds before they mature. Generally corporations include call provisions when they expect a possible decrease in interest rates, since they decrease the price of the bonds. This means that bonds with a call provision pay higher interest rates.

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