If You Own a Bond That Is Called Under a Make-Whole

question 88

Multiple Choice

If you own a bond that is called under a make-whole call provision, you will be paid a call price which is

• A) Equal to the face value
• B) Equal to the par value plus the total amount of the remaining interest payments
• C) Approximately equal to the current value of the bond
• D) Based on the market value plus a call premium of a specified dollar amount
• E) Approximately equal to the future value of the bond at normal maturity

---

Definitions:

Fair Market Value

The price at which an asset would trade in an open and competitive market between a willing buyer and a willing seller, both having reasonable knowledge of the pertinent facts.

Original Investments

Original investments refer to the initial amount of money put into a business or project by its owners or investors.

Net Income

The total earnings of a company after subtracting all expenses and taxes from total revenues, indicating the company's profitability.

Salary Allowances

Pre-determined amounts allocated for specific salary-related expenses, often including tax-exempt benefits.