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Call Risk

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Call risk
The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.

Call Risk
A risk that a callable bond will be repaid early and that the money earned may not be able to be reinvested in a security with a comparable return. Suppose one invests in a callable bond with coupon payments of 4%. However, interest rates fall and the issuer calls the bond and pays the par value. The investor may make a profit, but now he/she may only purchase a bond with a coupon of 2.5%. Most callable bonds include call periods in the indenture, protecting the bondholder from this risk for a certain period of time. Call risk is one of the most common kinds of reinvestment risk.

call risk


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I regard myself as part of a movement we call risk literacy.
The two-year facility with a further one year extension option eliminates margin call risk to CapLease for general interest rate and credit spread changes on all loan collateral other than CMBS securities.
The IDR is based on default remaining a real possibility for Thornburg's corporate obligations, particularly if Thornburg becomes exposed to meaningful margin call risk after expiration of the override agreement.
 
 
 
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