What Is a Call Provision

question 61

Multiple Choice

What is a call provision?

• A) the periodic repurchasing of issued bonds through a sinking fund by the issuer
• B) an option to the issuer to repurchase the bonds at a predetermined price
• C) the option for the bondholder to convert each bond owned into a fixed number of shares of common stock
• D) a clause in a bond contract that restricts the actions of the issuer that might harm the interests of the bondholders

---

Definitions:

Marginal Tax Rate

The rate at which the last dollar of income is taxed, demonstrating the percentage of tax applied to your next dollar of income.

Depreciation

A method to allocate the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Worst-Case Scenario

The most severe or unfavorable outcome that may happen in a given situation, often used in planning and risk management.

Soft Rationing

An internal policy mechanism by which a company limits the amount of funding allocated to new or existing projects, without a shortage of available funds.