SOFE Exam AFE Topic 2 Question 95 Discussion

Actual exam question for SOFE's AFE exam

Question #: 95
Topic #: 2

[All AFE Questions]

What give the issuer the right to retire the bond at certain times, typically if prevailing market interest rates fall below the rate on the bond?

ACall options

BPrepayment provisions

CVariable income statements

DInvestments modules

Show Suggested Answer

Suggested Answer: D

by Aimee at Feb 06, 2025, 02:25 AM

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Prepayment provisions, no doubt. It's like getting an early birthday present, but for bonds.

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16 days ago

I'm not sure, but I think it might be B) Prepayment provisions because it allows the issuer to retire the bond early.

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17 days ago

Call options, of course! Gives the issuer the power to retire the bond if market rates fall. Totally makes sense.

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22 days ago

I agree with Hubert, call options give the issuer the right to retire the bond.

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24 days ago

I think the answer is A) Call options.

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