A call feature allows A.the bondholder to redeem the bond before the maturity date. B.the corporation...
A call feature allows
A.the bondholder to redeem the bond before the maturity date.
B.the corporation to redeem the bond before the maturity date.
C,the corporation to convert the bond to common stock.
D,the bondholder to demand increased collateral.
Homework Answers
Option B i.e. the corporation to redeem the bond before the maturity date.
Reason :- A callable bond allows the issuer to redeem the bond
before maturity. When the bond is called, the bondholder receives
the par value (or sometimes more) and does not receive any
more coupons. Callable bonds are issued to allow the issuers
to hedge against interest rate risk.
Add Answer to:
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