A Call Provision, Which Allows the Corporation to Force an Early

question 104

Multiple Choice

A call provision, which allows the corporation to force an early maturity on a bond issue, usually contains all but which of the following characteristics?

• A) Most bonds must be outstanding at least five years before being called.
• B) After the call date, the call premium tends to decline over time.
• C) The provision typically calls for debt conversion into common stock.
• D) The corporation will pay a premium over par for the bonds.

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Definitions:

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Mode

The value that appears most frequently in a data set, a measure of central tendency in statistics.

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A measure of variability in statistics, calculated by subtracting the value at the first quartile from the value at the third quartile, reflecting the spread of the middle 50% of data points.

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