Asked by Pooja Attri on Jul 27, 2024
Verified
Which type of bond allows the issuer to buy back the bonds before maturity?
A) Callable bond.
B) Retractable.
C) Convertible bond.
D) Zero-coupon bond.
E) High yield bond.
Callable Bond
A type of bond that gives the issuer the right to repay the bond before its maturity date at a predetermined price.
Buy Back
The process by which a company repurchases its own shares from the marketplace, reducing the amount of outstanding stock.
Maturity
The time at which a financial instrument (such as a bond, loan, or investment) becomes due for payment or expires.
- Gain insight into the peculiarities of certain bond variants like callable, convertible, and zero-coupon bonds and their attributes.
Verified Answer
JD
Jagdeep DhaliwalJul 31, 2024
Final Answer :
A
Explanation :
Callable bonds allow the issuer to buy back the bonds before their maturity date, providing the issuer with flexibility to refinance the debt if interest rates decline.
Learning Objectives
- Gain insight into the peculiarities of certain bond variants like callable, convertible, and zero-coupon bonds and their attributes.