If the coupon interest rate remains constant from the time of issue until the bond matures, then the bond is called afixed-rate bond. The contract that describes the terms of a borrowing arrangement between a firm that sells a bond issue and the investors who purchase the bonds is called the . When are issuers more likely to call an outstanding bond issue

If the coupon interest rate remains constant from the time of issue until the bond matures, then the bond is called a FIXED-RATE bond.

A fixed rate bond will see its coupon interest rate remain the same during the entire duration of the bond.

The contract that describes the terms of a borrowing arrangement between a firm that sells a bond issue and the investors who purchase the bonds is called the INDENTURE.

An indenture in the context of a bond is a legal agreement that states the terms that the investors and the bond issuer will abide by which makes it a borrowing arrangement.

When are issuers more likely to call an outstanding bond issue?

a. When interest rates are lower than they were when the bonds were issued.

When interest rates are lower, issuers are more likely to call a bond so that they can be able to reissue another bond at a lower interest which would then reduce their interest payments.

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