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Management · Q542

International Finance and Treasury

Graduate and Post Graduate · Management · question 542

Q542

Up-front fee which must be paid by buyer to seller is called

A.
call premium
Answer
B.
discount premium
C.
strike premium
D.
exercise premium

Answer: Option A

Solution

Answer: Option A
Solution:
Up-front fee which must be paid by buyer to seller is called call premium. Call premium is the dollar amount over the par value of a callable debt security that is given to holders when the security is redeemed early by the issuer. The call premium is also called the redemption premium.