The net amount required to retire a bond before maturity (assuming no call premium and constant interest rates) is the

Question

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When a bond is retired before maturity, the issuer must pay the bondholders the face value of the bond plus any unamortized premium or minus any unamortized discount. This is because the bondholders have invested their money with the expectation of receiving the full face value at maturity, and retiring the bond early means that they will not receive the full interest payments they were expecting. Therefore, the issuer must compensate them by paying the full face value plus any unamortized premiums or discounts. Choice A is incorrect because the issuance price is not relevant when retiring a bond before maturity. Choice C is incorrect because the face value should be added to any unamortized premium or subtracted from any unamortized discount, not vice versa. Choice D is incorrect because the maturity value is also not relevant when retiring a bond before maturity.

The Net Amount Required to Retire a Bond Before Maturity