Question

___ bonds are often called by the firm prior to maturity.

Select one:

a. Mortgage?

b. ?Corporate

c. ?Floating rate

d. Callable?

e. Municipal?

Answer 1

Solution:
	Answer is d. Callable
Working Notes:
	Callable bonds are often called by the firm prior to maturity , As In Callable bonds , issuer have right to redeemed the bond before its maturity, and due to this rights to issuer this bond have higher coupon rates and Firm redeemed it as soon as they can to save excess coupon payments than normal bond market rates.
	Mortgage , Corporate Floating & Municipal bonds are not often redeemed until their maturity , as they are issued at normal bond market at to finance long term assets , and these Bonds do not of riders of callable before maturity normally.
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