SIE practice questioneasyCallable bonds
Which of the following best describes a callable bond?
- ABond can be converted to common stock at any time
- BBondholder has the right to sell the bond back to the issuer at par
- CBond can only be redeemed at maturity
- DIssuer has the right to redeem the bond prior to maturity✓ Correct answer
Explanation
Why D — Issuer has the right to redeem the bond prior to maturity
Callable bonds allow the issuer to repay principal before maturity, usually at a specified call price. Puttable bonds give this right to the holder, not the issuer.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Debt Securities questions