CFA Practice Question

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CFA Practice Question

A clause in the indenture of Convex Incorporated's 10-year coupon bonds specifies that on all coupon payment dates subsequent to the fifth coupon payment, the bonds can be sold to Convex Incorporated at par value.

A. This clause makes the bonds callable.
B. This clause makes the bonds refundable.
C. This clause makes the bonds putable.
Correct Answer: C

A putable bond can be sold to the bond issuer at a fixed price per terms of the bond indenture.

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