A $1,000 face value bond can be redeemed early at the issuer's discretion for $1,030,plus any accrued interest.The additional $30 is called which one of the following?

Question

Quizplus · Accepted Answer

The additional $30 paid by the issuer is called the call premium. This is the amount above the face value that the issuer must pay to redeem the bond early. The dirty price refers to the price of a bond including any accrued interest, and the redemption discount or redemption value typically refer to the face value of the bond when it is redeemed at maturity. The original-issue discount refers to a bond that was issued at a price lower than its face value. None of these terms accurately describe the additional $30 paid for early redemption.

A $1,000 Face Value Bond Can Be Redeemed Early at the Issuer's