{"id":42828,"date":"2024-04-15T21:20:42","date_gmt":"2024-04-15T21:20:42","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=42828"},"modified":"2024-04-15T21:20:42","modified_gmt":"2024-04-15T21:20:42","slug":"if-bonds-call-provision-is-practiced-in-first-year-of-issuance-then-an-additional-payment-is-classified-as","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/if-bonds-call-provision-is-practiced-in-first-year-of-issuance-then-an-additional-payment-is-classified-as\/","title":{"rendered":"If bond&#8217;s call provision is practiced in first year of issuance then an additional payment is classified as"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;issuance provision&#8221; option2=&#8221;bond provision&#8221; option3=&#8221;call provision&#8221; option4=&#8221;First provision&#8221; correct=&#8221;option3&#8243;]<!--more--><\/p>\n<p>The correct answer is C. call provision.<\/p>\n<p>A call provision is a feature of a bond that allows the issuer to repurchase the bond at a specified price before the maturity date. This is usually done when interest rates have fallen and the issuer can refinance the bond at a lower interest rate.<\/p>\n<p>If a bond&#8217;s call provision is exercised in the first year of issuance, the issuer will typically pay a call premium, which is an additional amount above the face value of the bond. This is because the bond is considered to be a relatively new issue and has a higher yield than bonds that have been issued for a longer period of time.<\/p>\n<p>The other options are incorrect.<\/p>\n<ul>\n<li>Issuance provision is a general term that refers to any provision that is included in a bond indenture. This could include the call provision, as well as other provisions such as the sinking fund provision and the restrictive covenants.<\/li>\n<li>Bond provision is a more specific term that refers to the provisions that are specific to a particular bond issue. This could include the call provision, as well as other provisions such as the interest rate, the maturity date, and the par value.<\/li>\n<li>First provision is not a technical term and is not used in the context of bonds.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;issuance provision&#8221; option2=&#8221;bond provision&#8221; option3=&#8221;call provision&#8221; option4=&#8221;First provision&#8221; correct=&#8221;option3&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"class_list":["post-42828","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>If bond&#039;s call provision is practiced in first year of issuance then an additional payment is classified as<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/if-bonds-call-provision-is-practiced-in-first-year-of-issuance-then-an-additional-payment-is-classified-as\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"If bond&#039;s call provision is practiced in first year of issuance then an additional payment is classified as\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;issuance provision&#8221; 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