a bond with a call provision would generally be sold to yield A) less than nonca

Question

a bond with a call provision would generally be sold to yield A) less than noncallable bond of similar character B) the same as similar noncallable bond C) more than a noncallable bond of similar character D) the same as similar convertible bonds a bond with a call provision would generally be sold to yield A) less than noncallable bond of similar character B) the same as similar noncallable bond C) more than a noncallable bond of similar character D) the same as similar convertible bonds a bond with a call provision would generally be sold to yield A) less than noncallable bond of similar character B) the same as similar noncallable bond C) more than a noncallable bond of similar character D) the same as similar convertible bonds

Explanation / Answer

Answer:

C) more than a noncallable bond of similar character

Explanation:

The call provision is disadvantageous to the bond holder as the bond can be redeemed any time at the option of bond issuer. So to compensate the bond holder for this risk and uncertanity, it is sold at a yield higher than a non callable bond of similar character.

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