Question

Callable bonds are

A. Convertible bonds.

B. Eurobonds.

C. Mortgage bonds.

D. None of the above.

Answer 1

The correct answer is option D. None of the above.

Callable bonds gives the right to the issuer to call back the bonds when the market interest rates fall. The investor is compensated for taking this risk with lower bond price.

Option A is incorrect because convertible bonds have a feature to convert to equity

Option B is incorrect because Eurobonds are bonds issued in a currency other than the currency of the market where it is issued

Option C is incorrect because mortgage bonds are bonds that are issued against the real estate assets. The assets act as collateral.