Products & RisksCâu 17 / 125
A call feature on a corporate bond primarily benefits:
a.The issuer, who can redeem the bonds early, typically when interest rates fall
b.The bondholder, who is guaranteed a higher yield
c.The underwriter, who earns extra commission
d.The rating agency
Giải thích
A call provision lets the issuer redeem bonds before maturity, usually at a small premium. Issuers exercise calls when rates have fallen so they can refinance at lower cost, which exposes bondholders to reinvestment risk. To compensate, callable bonds generally offer higher yields.
Luyện miễn phí toàn bộ 125 câu hỏi — không cần đăng ký.
Câu hỏi liên quan cùng chủ đề
- A convertible bond gives the holder the right to:
- A convertible bond has a par value of $1,000 and a conversion price of $40. How many shares of common stock will the holder receive upon conversion?
- Using a conversion ratio of 25 shares per bond, at what common stock price is a convertible bond trading at parity with a bond market price of $1,050?
- Under the Investment Company Act of 1940, an open-end investment company (mutual fund):
- The public offering price (POP) of a mutual fund share with a front-end sales load is calculated as:
- A mutual fund share has a net asset value (NAV) of $19.05 and a maximum sales charge of 5%. What is the public offering price?
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