With a make whole call provision:
A)the firm to pay a call price that is sufficient to provide bondholders an ex post return equal to the return they would have received on a noncallable Treasury bond with the same original maturity as the called bond.
B)the firm must retire either the entire (or whole) bond issue or none of the bonds.
C)bondholders are allowed to redeem their bonds at par value.
D)the firm has the option to restore bondholders' wealth by issuing new bonds, that would sell at par value, in exchange for the original bonds.

Question

Quizplus · Accepted Answer

A make whole call provision requires the firm to compensate bondholders in such a way that they receive a return equivalent to what they would have earned had they invested in a similar noncallable Treasury bond, ensuring they are not financially disadvantaged by the call.

With a Make Whole Call Provision