A. A call provision is considered to be detrimental by the bondholder because this gives the issuer the right to retire the bonds at any time prior to maturity. This option will be exercised if interest rates fall and the issuer is able to find other, cheaper sources of financing. In this environment, the investor may not be able to find an investment with the same rate of return. To cover for this increased level of risk, the investor will require that callable bonds pay a higher rate of interes.

B. A conversion option is considered to be a benefit by the investor because it enables the investor to convert the bonds to shares if that would be beneficial. Therefore, bonds that have a conversion feature will be able to issued at a lower interest rate.

C. This change in rating is an increase in the rating, meaning that there is less risk associated with the bonds.

This will enable the issuer to decrease the interest rate of the bonds.

D. Investors prefer bonds to have sinking funds since it provides some guarantee that the bonds will be able to be paid when they mature. Because investors like sinking funds, bonds with sinking funds will be able to be issued at a lower rate of interest.