When a bond is called, the old issue is retired and the bondholder receives ____.
A) new, lower interest rate bonds
B) new corporate stock
C) a cash payoff
D) treasury stock

Question

Quizplus · Accepted Answer

When a bond is called, the bondholder receives a cash payoff, which is the principal value of the bond plus any accrued interest up to the date of the call. The issuer may choose to issue new bonds or stocks, but this is not guaranteed and depends on the specific terms of the bond agreement. Treasury stock is unrelated to bond calls.

When a Bond Is Called, the Old Issue Is Retired