- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 2. Fixed-Income Cash Flows and Types
- Subject 2. Fixed-Income Contingency Provisions
CFA Practice Question
A callable bond allows the issuer to call the bond once a year starting from year six until the bond maturity date. The call option is most likely ______.
B. a European option
C. a Bermuda option
A. an American option
B. a European option
C. a Bermuda option
Correct Answer: C
Bermuda options are a combination of American and European options. They give bondholders a contract that is less expensive than American options and not as restrictive as European options.
User Contributed Comments 2
| User | Comment |
|---|---|
| maryprz14 | ONCE A YEAR... if you don't see this you will go for A My mistake by the way :/ |
| Inaganti6 | Same |