All bonds have a maturity date at which the issuer must pay them off.

QUESTION

All bonds have a maturity date at which the issuer must pay them off. What type of bond has two pay-off dates?

A) sinking-fund bond
B) serial bond
C) prerefunded bond
D) callable bond
E) convertible bond

ANSWER

Answer: D
Explanation: D) Issuers of callable bonds may specify a date before the full maturity date at which the bonds may be “called in” and paid off at a prespecified price.