An agreement giving the bond issuer the option to repurchase the bond at a specified price prior to maturity is the _____ provision.

Question

Quizplus · Accepted Answer

The provision described is a call provision, which gives the bond issuer the option to "call back" the bond at a predetermined price before its maturity date. This benefits the issuer because it allows them to refinance the debt at a lower interest rate if market conditions have changed since the bond was issued.

An Agreement Giving the Bond Issuer the Option to Repurchase