A call feature in a bond allows the issuer the opportunity to repurchase bonds at a stated price prior to maturity, and this option has a greater chance of being exercised (to the benefit of the bondholder) if market interest rates have fallen since the bond was issued.

Question

Quizplus · Accepted Answer

A call feature benefits the issuer, not the bondholder, because it allows the issuer to repurchase the bonds at a predetermined price, usually when market interest rates have fallen, so they can refinance at a lower cost.

A Call Feature in a Bond Allows the Issuer the Opportunity