Suppose now that interest rate volatility is 15% rather than 20%. The price of the callable bond would be ______________.

a. Higher because lower volatility increases the bond's coupon rate which would provide the investor with lower cash flows.

b. Higher because lower volatility means that the bond is less likely to be called since interest rates are less likely to experience a large decline.

c. Lower because lower volatility decreases the bond's coupon rate which would provide the investor with lower cash flows.

d. Lower because lower volatility means that the bond is more likely to be called since interest rates are more likely to experience a large decline.