The type of provision which forces bond holders to sell bonds to issuer at value above than par is classified as ___________?
Correct answer: D. call provision
- A. discount premium
- B. discount provision
- C. call premium
- D. call provision
Explanation
A call provision allows the issuer to require bondholders to surrender their bonds, usually at a call price above par that includes a call premium. A put provision, by contrast, gives the bondholder the right to sell the bond back.
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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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