One of the ways that issuers repay bonds is to exercise a ________ provision that allows the issuer to repurchase the bonds ________.

Question

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This is because a call provision allows the issuer to redeem, or "call back," the bonds before maturity at a predetermined price, which is usually at a premium to the bond's face value. This gives the issuer the flexibility to refinance the bond at a lower interest rate or to take advantage of other favorable market conditions.

One of the Ways That Issuers Repay Bonds Is to Exercise