单选题 Which of the following statements about a callable bond is TRUE? A. The call option on a bond trades separately from the bond itself. B. A bondholder usually loses if a bond is called by being forced to reinvest the proceeds at a lower interest rate. C. Callable bonds follow the standard inverse relationship between interest rates and price.

【正确答案】 B

【答案解析】A bondholder will most likely lose if a bond is called because a bond is most likely to be called in a declining interest rate environment. The issuer will likely call the bond and replace it with lower cost (lower coupon debt). The holder faces prepayment and reinvestment risk, because he must reinvest the bond cash flows into lower-yielding current investments.