______________ gives a ﬁrm the option to retire its bonds early.
A) An issue of put bonds.
B) A green shoe provision in the bond indenture.
C) A loan guarantee in the bond indenture.
D) A conversion privilege.
E) A call provision in the bond indenture.

Question

Quizplus · Accepted Answer

A call provision in the bond indenture gives a firm the option to retire its bonds early. It allows the issuer to buy back the bonds at a specified price, usually at a premium to the face value of the bond, before the maturity date. This gives the issuer the flexibility to refinance the debt at a lower interest rate if market conditions are favorable or if the issuer's creditworthiness has improved over time.

______________ Gives a ﬁRm the Option to Retire Its Bonds