Canadian Securities Course (CSC) Practice Exam · Question
A callable bond gives the issuer the right to:
A callable bond contains a call provision, which grants the issuer the right, but not the obligation, to repurchase the bond from the bondholders at a specified
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Question: A callable bond gives the issuer the right to:
Answer options:
- Extend the bond's maturity date. ✅ Repurchase the bond at a specified price before maturity.
- Increase the coupon rate of the bond.
- Convert the bond into common shares.
Correct answer: Repurchase the bond at a specified price before maturity.
Explanation: A callable bond contains a call provision, which grants the issuer the right, but not the obligation, to repurchase the bond from the bondholders at a specified price before the maturity date. This is typically done when interest rates fall.
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