CFA Practice Question

CFA Practice Question

The embedded option that is least likely to benefit the issuer of debt securities is a(n) ______.
A. right to call the issue
B. floor on a floater
C. accelerated sinking fund provision
Explanation: The floor on a floater benefits the bondholder when interest rates fall.

User Contributed Comments 3

User Comment
indrayudha Accelerated sinking fund give bond issuer flexibility to "pre-pay" hence reducing interest and increasing reinvestment risk to the bondholder.
mbuenafe does not help the issuer because the floor means the cost of funds can't get any lower.
j2krapez true
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