Q237
Rate of return on non-callable bonds is added into value of issuer option to calculate
A.
return on assets
B.
return on callable bond
AnswerC.
return on non-callable bonds
D.
return on equity
Answer: Option B
Solution
Answer: Option B
Solution:
Rate of return on non-callable bonds is added into value of issuer option to calculate return on callable bond. A callable bond is a debt instrument in which the issuer reserves the right to return the investor's principal and stop interest payments before the bond's maturity date.