Final answer:
The replacement of an existing bond issue with a new one is called refunding and it is true.
Step-by-step explanation:
The statement, 'The replacement of an existing bond issue with a new one is called refunding,' is True.
Refunding is a financial process in which a bond issuer replaces an existing bond issue with a new one, typically with more favorable terms or lower interest rates. This allows the issuer to save money by reducing their interest payments.
For example, if a company issued bonds with a high-interest rate and the market interest rates subsequently decreased, the company may choose to refund the existing bonds by issuing new ones with lower interest rates, thereby reducing their borrowing costs.