A Call Provision on a Bond

question 139

Multiple Choice

A call provision on a bond:

• A)Permits the corporation to redeem the bonds at a specified price.
• B)Allows the corporation to revise the stated interest rate.
• C)Allows the corporation to revise the maturity date.
• D)Always creates the lowest price at which the bond will sell for.

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Definitions:

Diseconomies of Scale

The phenomenon when a company or business grows so large that the costs per unit increase, leading to inefficiency.

Long-Run

A time period in economics where all inputs are variable, allowing firms to adjust all factors of production.

Average Cost Curve

A graph showing the cost per unit of output produced, calculated by dividing total costs by the quantity of output.

U‐Shaped

The U-shaped concept typically refers to a relationship where variables initially decrease, reach a lowest point, and then increase, forming a graph that resembles a U shape.