Examveda

Value of option issued to call debt is $940 and return rate on callable bond is $480 then return rate on non-callable bond is

A. $460

B. $1,520

C. $1,420

D. $1,620

Answer: Option A

Solution (By Examveda Team)

Return rate on non-callable bond = Value of option issued to call debt - Return rate on callable bond
= $940 - $480 = $460.

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