DALL STATEMENTS ARE TRUE.NOTE

95) D

All statements are true.

Note: A refunding provision is not the same thing as a call provision! A bond that is noncallable has absolute

protection against premature retirement—it cannot be called for any reason, period. In stark contrast, a

nonrefundable bond can be called for any reason other than refunding. If a bond is callable but

nonrefundable, the source of funds for the redemption of the bond has to be something other than a new

bond issued at a lower coupon rate—such as, funds from operations or a new equity issue. Redemption,

which refers to the retirement of bonds, differs from refunding, which refers to the source of funds.