Which of the following is TRUE about a bond with a deferred call provision? A) It could be called at any time during the initial call period, but not later. B) It could be redeemed at any time prior to maturity. C) It could not be called right after the date of issue. D) Principal repayment can be deferred until it reaches maturity.
Why not D?
Because while that may be true, it’s not ALWAYS true. What if you had a deferred callable bond with a sinking fund provision? A deferred call provision means that the issuer can’t call it until a certain time after issuance has passed.
^ Right and to add to that, it could be a puttable bond or an amortizing bond or have covenants that make it immediately repayable.