Asked by Anamarys Sanchez on Jun 03, 2024
Verified
An agreement giving the bond issuer the option to repurchase the bond at a specified price prior to maturity is the _______________ provision.
A) Sinking fund
B) Call
C) Seniority
D) Collateral
E) Trustee
Call Provision
A clause in a bond's contract that allows the issuer to repurchase and retire the debt before its maturity date, usually at a premium price.
Bond Issuer
An entity, often a corporation or government, that issues debt securities to raise funds.
- Understand the importance of call, sinking fund, and convertible attributes in bond investments.
Verified Answer
CR
Crystal RodriguezJun 05, 2024
Final Answer :
B
Explanation :
The call provision allows the bond issuer the option to repurchase the bond at a specified price before it matures. This is often done when interest rates fall, allowing the issuer to refinance the debt at a lower rate.
Learning Objectives
- Understand the importance of call, sinking fund, and convertible attributes in bond investments.