Value of option issued to call debt is $670 and return rate on callable bond is $540 then return rate on non-callable bond is

A. $1,210

B. $1,010

C. $130

D. $1,020

Answer: Option C

Solution(By Examveda Team)

Bon-callable bond = Value of option issued to call debt - Return rate on callable bond
= $670 - $540 = $130.