Asked by Antonio DjToniko on Jul 06, 2024
Verified
The amount by which the call price exceeds the bond's par value is the:
A) Coupon rate.
B) Redemption value.
C) Call premium.
D) Original-issue discount.
E) Call rate.
Call Premium
The amount by which the call price of a bond or preferred stock exceeds its face value or issue price.
Par Value
The face value of a bond or stock as stated by the issuing company, typically not indicative of market value.
Call Price
The price at which a callable bond or security can be redeemed by the issuer before its maturity.
- Acquire knowledge regarding unique bond categories such as callable, convertible, and zero-coupon bonds, along with their characteristics.
Verified Answer
ST
stephanie tantohJul 08, 2024
Final Answer :
C
Explanation :
The call premium is the amount by which the call price of a bond exceeds its par value. This is an extra amount that issuers pay to bondholders when they choose to redeem the bond before its maturity date.
Learning Objectives
- Acquire knowledge regarding unique bond categories such as callable, convertible, and zero-coupon bonds, along with their characteristics.
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