Bonds That Give the Issuer an Option of Retiring Them

question 87

Multiple Choice

Bonds that give the issuer an option of retiring them before they mature are known as:

• A) Convertible bonds.
• B) Callable bonds.
• C) Serial bonds.
• D) Registered bonds.
• E) Debentures.

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Definitions:

Overallotment Option

A provision that allows underwriters to sell investors more shares than initially planned by the issuer, typically in an Initial Public Offering (IPO).

IPO Underpricing

The phenomenon where the initial offering price of a stock is set lower than the market price on its first trading day.

Underpricing

A situation in which a new issue of securities is priced below its market value, leading to immediate gains for investors when the stock is traded publicly for the first time.

Value

The economic, physical, or appraised valuation of a resource, merchandise, or assistance.