When the corporation issuing the bonds has the right to redeem the bonds prior to the maturity, the bonds are

A) convertible bonds
B) unsecured bonds
C) debenture bonds
D) callable bonds

Question

When the corporation issuing the bonds has the right to redeem the bonds prior to the maturity, the bonds areA) convertible bondsB) unsecured bondsC) debenture bondsD) callable bonds

Carie Parker · Accepted Answer

Final Answer : D, Explanation :  Callable bonds are those that can be redeemed by the issuing corporation before the maturity date. This means that the corporation has the right to buy back the bonds from investors at a predetermined price or premium. This feature provides flexibility to the corporation as it can retire the bonds when interest rates decline or when it has excess cash.

When the corporation issuing the bonds has the right to redeem the bonds prior to the maturity, the bonds are

A) convertible bonds
B) unsecured bonds
C) debenture bonds
D) callable bonds

Definitions

Learning Objectives

Learning Objectives

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