Callable or redeemable bonds are bonds that can be redeemed or paid off by the issuer prior to the bonds’ maturity date. When an issuer calls its bonds, it pays investors the call price (usually the face value of the bonds) together with accrued interest to date and, at that point, stops making interest payments. Sometimes a call premium is also paid. Call provisions are often a feature of corporate and municipal bonds.
An issuer may choose to call a bond when current interest rates drop below the interest rate on the bond. That way the issuer can save money by paying off the bond and issuing another bond at a lower interest rate. This is similar to refinancing the mortgage on your house so you can make lower monthly payments. Callable bonds are more risky for investors than non-callable bonds because an investor whose bond has been called is often faced with reinvesting the money at a lower, less attractive rate. As a result, callable bonds often have a higher annual return to compensate for the risk that the bonds might be called early.
There are three primary types of call features, including:
Federal Highway Administration GVWR Class Identification Find your vehicle's GVWR by decoding the vin. Class…
China CMIIT ID is required for all wireless devices (cellular phones, modems, routers, etc.) imported…
Singapore Radio Type Approval (IMDA) is a technical specification and compliance process for radio communications…
Waioder Definition is not a meaningful term in any of the languages, and it isn't…
MNPI stands for Material Non-Public Information. Material information is accurate information that is not commonly…