The call premium is added to face value of the bond to calculate: _____________?
Correct answer: A. call price of bond
- A. call price of bond
- B. premium price of bond
- C. call price of stock
- D. discounted price of stock
Explanation
The call price is the amount an issuer must pay to redeem a callable bond, calculated as its face value plus the call premium. The premium compensates bondholders for early redemption.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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