Call protection is defined as the number of years into the issue before the issuer may exercise a call provision.

• A. The number of years into the issue before the issuer may exercise a call provision
• B. The interest rate at which the issuer may call the bond
• C. The percentage of par that must be repaid to call
• D. The issue date of the bond

Answer: (A)

Call protection is about how long an issuer must wait after the bond is issued before it can exercise a call. It’s defined as the number of years into the issue during which the issuer cannot call the bond, giving investors a guaranteed period of coupon payments without the risk of early redemption. After that period ends, the issuer may call at the specified call price.

This focus on the duration from issuance distinguishes it from other concepts: the interest rate involved in calling isn’t what defines protection, the percentage of par relates to the redemption price, and while the issue date marks the start, call protection specifically measures the length of time after that date where calling is not permitted.