The value of a callable bond:
A)is unlimited
B)Is limited by its face value
C)Is limited by its call price
D)Is limited by high interest rates

Question

Quizplus · Accepted Answer

The value of a callable bond is limited by its call price, which is the amount the issuer must pay to repurchase the bond before its maturity date. Normally, the call price is slightly higher than the face value of the bond. Therefore, the maximum value of a callable bond is the call price.

The Value of a Callable Bond