A Call Feature in a Bond Allows the Issuer the Opportunity

question 215

True/False

A call feature in a bond allows the issuer the opportunity to repurchase bonds at a stated price prior to maturity. This option has a greater chance of being exercised (to the detriment of the bondholder) if market interest rates have risen since the bond was issued.

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Definitions:

Rate Of Return

The increase or decrease in the value of an investment during a given time frame, represented as a percentage of the investment's original price.

Investor Indifferent

A situation in finance where an investor is neutral between two or more investment options as they yield the same expected return or utility.

Department Store

A large retail establishment that offers a wide range of products across multiple categories, often in different departments.

Interest Rate

Interest Rate is the percentage at which interest is paid by borrowers for the use of money that they borrow from a lender.