Which of the following would describe a callable bond?
A)Borrower has the right to pay off the bonds prior to due date.
B)Borrower has the right to issue more bonds prior to due date of existing bonds.
C)Borrower has the right to call off the interest payments on the bonds.
D)Investor has the right to call off the interest payments on the bonds.

Question

Quizplus · Accepted Answer

A callable bond is a type of bond that gives the issuer (borrower) the right to pay off (redeem) the bond before its scheduled maturity date. This feature allows the issuer to refinance the debt if interest rates decline after the bond is issued, potentially saving on interest costs.

Which of the Following Would Describe a Callable Bond