SOFE Exam AFE Topic 2 Question 101 Discussion

Actual exam question for SOFE's AFE exam

Question #: 101
Topic #: 2

[All AFE Questions]

What give the issuer the right to retire the bond at certain times, typically if prevailing market interest rates fall below the rate on the bond?

ACall options

BPrepayment provisions

CVariable income statements

DInvestments modules

Show Suggested Answer

Suggested Answer: A

by Lashawnda at Jul 08, 2025, 09:09 AM

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Matthew

4 days ago

That's a good point, but I still think call options are the correct answer because they specifically refer to the right to retire the bond based on interest rates.

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Elfrieda

9 days ago

A call option seems like the obvious choice here. I mean, who doesn't love a little early retirement, even for bonds, right?

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Larue

17 hours ago

I agree, call options give the issuer the right to retire the bond early.

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Sean

10 days ago

But what about prepayment provisions? Don't they also give the issuer the right to retire the bond?

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Noel

12 days ago

I agree with Matthew, call options give the issuer the right to retire the bond.

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Matthew

19 days ago

I think the answer is A) Call options.

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