A "make-whole" call provision on a bond provides for

Question

Quizplus · Accepted Answer

A "make-whole" call provision on a bond provides for a call price equal to the bond's approximate market value at the time of call. This means that if the issuer chooses to call the bond before maturity, they will have to pay a price that compensates the bondholders for the loss of expected interest income. The "make-whole" provision is meant to protect bondholders from being forced to sell their bonds back to the issuer at a price that is lower than their market value, which could result in a loss for the bondholders. Therefore, option B is the correct answer.

A "Make-Whole" Call Provision on a Bond Provides for