A company may retire bonds by:
A)Exercising a call option.
B)The holders converting them to stock.
C)Purchasing the bonds on the open market.
D)Paying them off at maturity.
E)All of the choices are correct.

Question

Quizplus · Accepted Answer

All of the choices are correct. A company may retire bonds by exercising a call option, which allows the company to buy back the bonds from bondholders at a predetermined price. Alternatively, bondholders may choose to convert their bonds to stock, which would eliminate the need for the company to make interest payments on the bonds. The company may also purchase the bonds on the open market, either through a tender offer or through open market purchases. Finally, the company may simply pay off the bonds at maturity. All of these options are ways for a company to retire its bonds.

A Company May Retire Bonds By