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"Which call covenant MUST be considered when computing the dollar price of a municipal premium bond quoted on a yield basis?"

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User Handicop
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1 Answer

3 votes

Answer: In whole call

Step-by-step explanation:

The yield basis is a method that is used to quote a fixed-income security price as a yield percentage. The yield basis allows bonds that has different characteristics to be compared easily. It is calculated when the coupon amount that is paid yearly is divided by bond purchase price.

The call covenant that must be considered when computing the dollar price of a municipal premium bond quoted on a yield basis is the in whole call. This is a form of callable bond whereby the entire issue will have to be called at once.

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User Eldo
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