Correct answer: C

A fixed-price call provision gives the issuer the right to redeem the bond early at a preset call price.

• A is true: the call feature has value to the issuer, so the callable bond must trade at a discount to an otherwise identical non-callable bond.
• B is true: callable bonds can show negative convexity at low yields because price appreciation becomes limited when the bond is likely to be called.
• C is false: bondholders do not benefit when rates rise; they would prefer to refinance when rates fall, but the issuer is the one with the call option.
• D is true: the issuer can refinance at lower rates by calling the bond and issuing new debt.

So the exception is C.