[amp_mcq option1=”higher than par value” option2=”lower than par value” option3=”equal to par value” option4=”zero to par value” correct=”option3″]<\/p>\n
The correct answer is: C. equal to par value<\/strong><\/p>\n A call provision is a provision in a bond or preferred stock agreement that gives the issuer the right to repurchase the bond or preferred stock at a specified price, called the call price, before the maturity date. The call price is typically set at a premium to the par value of the bond or preferred stock.<\/p>\n The call provision is beneficial to the issuer because it allows the issuer to retire the debt or preferred stock at a lower cost than if it were to wait until maturity. The call provision is also beneficial to the issuer if interest rates decline, because the issuer can then issue new debt or preferred stock at a lower interest rate.<\/p>\n The call provision is not beneficial to the bondholders or preferred stockholders, because it means that the bondholders or preferred stockholders may be forced to sell their bonds or preferred stock at a lower price than they paid for them.<\/p>\n The call provision is typically used by companies that have a strong financial position and that believe that interest rates are likely to decline in the future.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”higher than par value” option2=”lower than par value” option3=”equal to par value” option4=”zero to par value” correct=”option3″]<\/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-43127","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"\n