An issuer has a bond outstanding that matures in 18 years. Which one of the following prevents the issuer from buying back that bond today?

Question

Quizplus · Accepted Answer

Call protection period prevents the issuer from buying back the bond before a certain period of time. Therefore, the issuer cannot buy back the bond today. The make-whole provision is a clause that requires the issuer to pay a premium to the bondholders if they choose to call the bond before it matures. The newly issued provision refers to the clause that says new bonds cannot be issued that rank higher in priority than existing bonds. The put provision gives the bondholders the right to sell the bond back to the issuer at a predetermined price. The call premium is the price that the issuer pays to buy back the bond before it matures.

An Issuer Has a Bond Outstanding That Matures in 18