Option A (Incorrect): A callable bond allows the issuer to retire the bond before maturity, but it does not mandate the issuer to do so annually.
Option B (Incorrect): A step-up note features a coupon rate that increases over time according to a predetermined schedule, but it does not involve the retirement of principal.
Option C (Correct): A sinking fund provision requires the issuer to retire a portion of the bond's principal each year, ensuring gradual repayment rather than a lump sum at maturity. This aligns with the requirement described in the question.
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If an issuer is required to retire a specified portion of the bond's principal each year, the bond most likely:
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Last updated: July 15, 2026 at 14:06
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A
is callable.
33.3%
B
is a step-up note.
22.2%
C
has a sinking fund provision.
44.4%
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If an issuer is required to retire a specified portion of the bond's principal each year, the bond most likely: | Chartered Financial Analyst Level 1 Quiz - LeetQuiz