Question

Many retired people invest a significant portion of their money in bonds of corporations because of the relatively low level of risk. During the 1980s, significant inflation caused some interest rates to rise to as high as 15 percent. Retired people who bought bonds that paid only 6 percent continued to earn at the lower rate. During the 1990s, inflation subsided and interest rates declined. Many corporations took advantage of call options on bonds and refinanced high interest rate debt with low interest rate debt. In your judgment, is it ethical for corporations to continue paying low interest rates when rates increase but to call bonds when rates decrease?


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  • CreatedAugust 04, 2015
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