A particular feature of callable bonds is that they reduce the bondholder's risk by requiring the issuer to set assets aside to repay the bonds at maturity.

Question

Joshua Turpin · Accepted Answer

Final Answer : False, Explanation :  Callable bonds actually increase the bondholder's risk, as they allow the issuer to repay the bonds early, potentially leaving the bondholder with lower-yielding investments. They do not require the issuer to set assets aside to repay the bonds at maturity.

A particular feature of callable bonds is that they reduce the bondholder's risk by requiring the issuer to set assets aside to repay the bonds at maturity.

Definitions

Learning Objectives

Learning Objectives

Related questions