Call provisions are often part of ______________, but usually not bonds issued by ______________.
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A. B. C. D.C
A call provision is a feature in a bond that allows the issuer to redeem the bond before its scheduled maturity date. When a bond has a call provision, the issuer has the right, but not the obligation, to redeem the bond at a predetermined price (usually at a premium to the face value) and before the scheduled maturity date. Call provisions are typically included in corporate and municipal bonds but are usually not found in bonds issued by the Federal Government.
Option A, which suggests that call provisions are often part of zero-coupon bonds but not federal government bonds, is incorrect. Although zero-coupon bonds are issued with a call feature, it is not a common feature.
Option B, which suggests that call provisions are often part of corporate bonds but not zero-coupon bonds, is partially correct. Corporate bonds are commonly issued with call provisions. However, zero-coupon bonds are often callable, but it is not a common feature.
Option C is the correct answer. Call provisions are often included in both corporate and municipal bonds. However, they are usually not found in bonds issued by the Federal Government.
Option D, which suggests that none of the above options is correct, is incorrect because option C is the correct answer.