The party that has the right to exercise the call option on callable bonds is (are):
A) The bondholders.
B) The bond issuer.
C) The bond indenture.
D) The bond trustee.
E) The bond underwriter.

Question

Quizplus · Accepted Answer

The bond issuer has the right to exercise the call option on callable bonds. Callable bonds have a call option that allows the issuer to redeem the bond before maturity. This option provides the issuer with flexibility to refinance debt at a lower cost if interest rates have declined.

The Party That Has the Right to Exercise the Call