Which of the following statements regarding a call provision is most accurate? A

Question

Which of the following statements regarding a call provision is most accurate?

A. A call provision allows the issuer to repurchase the bonds at the market price. B. The call price is generally set at or below, and expressed as a percentage of, the bond's face value. C. The issuer can repurchase a fraction of the outstanding bonds in the market or it can make a tender offer for the entire issue. D. A call feature gives the bondholder the option to convert each bond owned into a fixed number of shares of common stock.E. A call feature forces the issuer of the bond to retire all outstanding bonds on (or after) a specific date for the call price if the call price exceeds the market price.

Explanation / Answer

correct option is E"

A call feature forces the issuer of the bond to retire all outstanding bonds on (or after) a specific date for the call price if the call price exceeds the market price.

The call option provides the right to issuer to call the bond on or after the specified date mention (but before maturity ) for a call price if the market goes unfavorable.

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