Asked by Meghan Suchy on Jul 14, 2024
Verified
When a bondholder is granted the right to force the issuer to repay the bond prior to maturity, the bond:
A) Is an income bond.
B) Is a convertible bond.
C) Contains a call provision.
D) Contains a put provision.
E) Contains a zero-out provision.
Put Provision
A clause in a bond or other security that allows the holder to force the issuer to buy back the security before its maturity date.
Call Provision
A clause in a bond contract allowing the issuer to repay the bond before its maturity date under specific conditions.
Convertible Bond
A type of bond that the holder can convert into a specified number of shares of the issuing company, usually at predetermined times during its life.
- Recognize the advantages and disadvantages of various bond provisions for issuers and investors.
Verified Answer
Learning Objectives
- Recognize the advantages and disadvantages of various bond provisions for issuers and investors.
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