Asked by Kelsey Brianne on Jul 27, 2024
Verified
Ignoring default, which of the following is NOT accurate: prior to maturity, ______________.
A) An unprotected callable bond can be terminated (called) by the issuer.
B) An income bond can be terminated (repaid) by the issuer.
C) A convertible bond can be terminated (converted) by the investor.
D) A put bond can be terminated (put) by the investor.
E) A bond with a sinking fund can be terminated (repaid) by the bond trustee.
Callable Bond
A type of bond that the issuer has the right to repay before its maturity date, at a predetermined call price.
Sinking Fund
A reserve fund established by a company to repay debt or replace a major asset in the future.
Income Bond
A type of bond that only pays interest if the issuing corporation has earned enough income to cover the interest payments, often used by companies in financial distress.
- Delve into the details of special kinds of bonds, including callable, convertible, and zero-coupon bonds, and their distinctive features.
Verified Answer
ZK
Zybrea KnightAug 02, 2024
Final Answer :
B
Explanation :
Income bonds cannot be terminated or repaid by the issuer at their discretion prior to maturity. These bonds typically pay interest only if the issuer has sufficient profit, and the principal is due at maturity, not before.
Learning Objectives
- Delve into the details of special kinds of bonds, including callable, convertible, and zero-coupon bonds, and their distinctive features.