Callable bonds may be:
A)called for early retirement at the option of the issuer.
B)called for early retirement at the option of the bondholder.
C)converted to common stock at the option of the bondholder.
D)converted to common stock at the option of the issuer.

Question

Quizplus · Accepted Answer

Callable bonds can be called for early retirement at the option of the issuer. This means that the issuer can choose to pay off the bond before the maturity date if interest rates have dropped or for any other reason that benefits the issuer. This is beneficial to the issuer but may not be ideal for the bondholder as they may have to reinvest their funds at a lower interest rate. Therefore, option A) is the correct answer.

Callable Bonds May Be