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Deferment Period

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Period of Call Protection
In callable bonds, a period of time during which a bond may not be prematurely redeemed. Interest payments are guaranteed during the call protection period but not afterward. The bond may be redeemed at any point after the call date, which means that the issuer could return the principal to bondholders and interest payments would cease. The period of call protection exists to protect bondholders from the risk that interest rates will fall before the call date. The period of time is often called the cushion.

deferment period
The period following the issue of a security during which it cannot be called by the issuer. Also called deferred call period, period of call protection, preferred call period. See also call protection.


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In the latter case, companies add the accrued interest of deferment period with the principal loan amount.
A portion ($8,000) of the loans are subsidized, meaning the government pays the interest during deferment periods, but the remaining amount is unsubsidized and Brown will have to pay on the interest while in school or defer and accumulate the interest until repayment.
 
 
 
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