How much will you be paid if you own a bond that is called under a make-whole call provision?

Question

Quizplus · Accepted Answer

Under a make-whole call provision, the bondholder will be paid the present value of all future bond payments that will not be paid because of the call. This will typically include the remaining interest payments as well as the principal amount. The make-whole provision is structured in such a way that the bondholder is compensated for any loss of income they may suffer as a result of the call, which is why they are paid the present value of future payments, rather than just the face value or par value of the bond.

How Much Will You Be Paid If You Own a Bond