Products & Their RisksQuestion 15 of 398
Which corporate bond feature allows the issuer to redeem the bonds before maturity, typically when interest rates have fallen?
a.Convertible feature
b.Put feature
c.Call feature
d.Sinking fund deposit requirement
Explanation
A call feature gives the issuer the right to redeem bonds early, which it tends to do after rates fall so it can refinance more cheaply. A put favors the investor, a convertible allows conversion to stock, and a sinking fund is a repayment reserve, not an early-redemption right for the issuer's benefit in a rate decline.
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