A Deferred Call Provision Refers To

question 242

Multiple Choice

A deferred call provision refers to:

• A) The open market price of a callable bond on a certain date.
• B) The seniority of callable bonds to non-callable bonds in the event of corporate default.
• C) The prohibition of a company from ever redeeming callable bonds.
• D) The prohibition of a company from redeeming callable bonds prior to a certain date.
• E) The amount by which the call price for a callable bond exceeds its par value.

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Definitions:

Marginal Cost

The increase in cost that arises from producing one additional unit of a good or service.

Production Level

The quantity of goods or services that a company is capable of producing over a given period of time.

Marginal Costs

The amount spent on producing an extra unit of a product or service.

Fixed Costs

Costs that do not vary with the level of output or sales in the short term, such as rent or salaries.