Economics Bonds Questions
The impact of call provisions on bond prices is that they can potentially decrease the price of a bond. This is because call provisions give the issuer the right to redeem or call back the bond before its maturity date. As a result, investors may be less willing to pay a premium for a bond with a call provision, as there is a risk that the bond will be called back and they will not receive the full interest payments or the return of their principal. Therefore, bonds with call provisions generally have lower prices compared to similar bonds without call provisions.