n NISM Certifications
XXI NISM Series XXI-A
Medium

In a Callable bond, who has the right to prepay the bond before maturity?

Practice question from NISM XXI A for PMS - Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. Issuer

    Correct answer

  2. B

    Investor

  3. C

    Both 1 and 2 must jointly agree

  4. D

    None of the above

Why this is the answer

The issuer has the right to call (prepay) the bond before maturity, typically when interest rates decline, to reissue at a lower rate.

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