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

Question

Quizplus · Accepted Answer

The bond issuer has the right to exercise a call option on callable bonds, as stated in the bond indenture. The call option allows the issuer to redeem the bonds at a specified price before the maturity date, giving them the ability to refinance at a lower interest rate if market conditions have changed.

The Party That Has the Right to Exercise a Call