| Yet, inexplicably, Treasury officials decided at that time of record-high interest rates to make 30-year bonds noncallable. |
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| The notes and accompanying interest payments are backed by the full faith and credit of the issuer and are either callable or noncallable. |
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| So why buy noncallable bonds, especially since their yields are lower than callables? |
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| Since all the convertible bonds in our sample are also callable, noncallable corporate bonds were excluded from the sample. |
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| If interest rates fall, noncallable zeroes experience additional price appreciation compared to noncallable coupon bonds. |
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| Our tests are based on a sample of 958 bonds issued during 1987-1991, when issuance of noncallable bonds was quite common. |
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| The following section will discuss how the value of a callable bond differs from a noncallable bond. |
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