Question

When a financial instrument includes a _________ provision, allowing the issuer to the option to retire the financial instrument prior to its maturity, the financial instrument generally carries a higher interest rate.

Answer 1

The correct word for the blank space is: callable.

Step-by-step explanation:

A Callable Provision -typically referred when talking about bonds- is one that can be paid back to the issuer partially or in full before its maturity date. This provision allows the financial instrument issuer to replace higher than market instruments with ones lower.