All of the following may serve to reduce the coupon rate that would otherwise be required on a bond issued at par,except a
A) Sinking fund.
B) Restrictive covenant.
C) Call provision.
D) Change in rating from Aa to Aaa.
E) None of the above (all may reduce the required coupon rate).

Question

Quizplus · Accepted Answer

A call provision allows the issuer to repurchase the bond before maturity, which is a benefit to the issuer but a risk to the bondholder. Therefore, bonds with call provisions typically require a higher coupon rate to compensate for this risk, unlike the other options which can reduce the required coupon rate by providing additional security or improving creditworthiness.

All of the Following May Serve to Reduce the Coupon