Asked by Danielle Tabor on May 13, 2024
Verified
Which of the following is NOT used in calculating the "Canada call"?
A) the maturity date
B) the default probability
C) the market risk
D) all of the above are
Canada Call
A provision in some bonds that allows the issuer to redeem the bond early, specifically in the Canadian market.
Maturity Date
The specified date on which the principal amount of a bond or other debt instrument is due to be paid in full.
Default Probability
The likelihood that a borrower will be unable to make required debt payments, leading to a default.
- Elucidate the significance and roles of bond covenants in safeguarding the interests of bond investors.
Verified Answer
EP
Erica PurnellMay 18, 2024
Final Answer :
D
Explanation :
The "Canada call" calculation does not specifically include any of the listed options (A: the maturity date, B: the default probability, C: the market risk) as it is a term not commonly associated with a specific financial calculation that involves these parameters.
Learning Objectives
- Elucidate the significance and roles of bond covenants in safeguarding the interests of bond investors.