Which of the following situations would be consistent with a relative decrease in the offered coupon...

Which of the following situations would be consistent with a relative decrease in the offered coupon for a corporate bond issuance selling at par?

	A.	An increase in the risk free rate.
	B.	The addition of a convertibility option.
	C.	The addition of a call provision.
	D.	A company's credit rating declining from AAA to A.
	E.	All of these choices are correct.

Solutions

Expert Solution

The correct answer is The addition of a call provision.

The addition to the call provision reduces the coupon rate because it gives the provision to the company to issue lower coupon rate when interest rate goes down. Therefore, Option C is the correct answer.

jeff jeffy answered 2 years ago

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