Which of the Following Is Not True Regarding the Call

question 44

Multiple Choice

Which of the following is not true regarding the call provision?

• A) It typically requires a firm to pay a price above par value when it calls its bonds.
• B) The difference between the market value of the bond and the par value is called the call premium.
• C) A principal use of the call provision is to lower future interest payments.
• D) A principal use of the call provision is to retire bonds as required by a sinking-fund provision.
• E) A call provision is normally viewed as a disadvantage to bondholders.

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