Posted by Rajini on .
Most institutional investors purchase long-term bonds, as assets for their investment portfolios, to offset long-term liabilities they have on their balance sheets. Which statement below helps explain why do they not like call provisions in bonds? (Points: 4)
Adding a call provision with a premium compensates them for their troubles.
Having a bond called may mean the fund must reinvest in other bonds, which pay lower yields to maturity.
Bonds that are called can always be re-invested at higher rates.
Bonds that are called mean the company became riskier.