Bonds that have an option exercisable by the issuer to retire them at a stated dollar amount prior to maturity are known as:
A) Convertible bonds.
B) Sinking fund bonds.
C) Callable bonds.
D) Serial bonds.
E) Junk bonds.

Question

Quizplus · Accepted Answer

Callable bonds have an option that allows the issuer to retire them at a stated dollar amount before the maturity date. This feature gives the issuer the flexibility to refinance the debt in case interest rates fall, making it cheaper to borrow money.

Bonds That Have an Option Exercisable by the Issuer to Retire