A particular feature of callable bonds is that they reduce the bondholder's risk by requiring the issuer to create a sinking fund of assets set aside at specified amounts and dates to repay the bonds at maturity.

Question

Quizplus · Accepted Answer

Callable bonds do not necessarily reduce bondholder risk by requiring a sinking fund. Instead, they give the issuer the option to redeem the bonds early, which can increase risk for the bondholder.

A Particular Feature of Callable Bonds Is That They Reduce