Step up upon feature will lead to

Question

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Step up upon feature refers to a provision in a bond that allows for an increase in the coupon rate or yield if the bond issuer fails to meet certain conditions or if a specified event occurs. The feature provides added compensation to investors for taking on additional risk.

Therefore, a step up upon feature will have a positive basis because it provides additional compensation to the bondholder, which is seen as a positive credit quality feature. This means that the value of the bond will be higher than similar bonds without the step-up feature, leading to a lower yield for the investor.

Step Up Upon Feature Will Lead to