Redemption


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Redemption

Repayment of a debt security or preferred stock issue, at or before maturity, at par or at a premium price.

Redemption

1. In bonds, the act of an issuer repurchasing a bond at or before maturity. Redemption is made at the face value of the bond unless it occurs before maturity, in which case the bond is bought back at a premium to compensate for lost interest. The issuer has the right to redeem the bond at any time, although the earlier the redemption take place, the higher the premium usually is. This provides an incentive for companies to do this as rarely as possible.

2. The act of the issuing company repurchasing stocks or mutual funds. In the case of mutual funds, the repurchase is made at net asset value per share. Stocks may be redeemed in cash or by proration. See also: Proratable factor.

redemption

The retirement of a security by repurchase. Although generally used in reference to the repurchase of a bond before maturity, the term also applies to stock and mutual fund shares. See also partial redemption.

Redemption.

When a fixed-income investment matures, and you get your investment amount back, the repayment is known as redemption.

Bonds are usually redeemed at par, or face value, traditionally $1,000 per bond. However, if a bond issuer calls the bond, or pays it off before maturity, you may be paid a premium, or a certain dollar amount over par, to compensate you for lost interest.

You can redeem, or liquidate, open-end mutual fund shares at any time. The fund buys them back at their net asset value (NAV), which is the dollar value of one share in the fund.

References in periodicals archive ?
If the redemption did not qualify as an exchange under Sec.
The distribution is in redemption of a noncorporate shareholder and is in partial liquidation of the distributing corporation.
He stresses that for a student to make a favorable impression on him and succeed as a Redemption student, the student must want to make something of his life.
8 million accounting charge in connection with the preferred redemption there is no impact to the company's previously announced funds from operations guidance for 2004.
Subsequently, Joann filed a refund claim on the grounds the redemption was not taxable to her under section 1041.
301(b)(1) applies only when redemption results "in a meaningful reduction in the shareholder's proportionate interest in the corporation.
A redemption in this category must meet certain mathematical tests.
Holders of the Preferred Securities should complete the appropriate instruction form for redemption or conversion, as applicable, pursuant to The Depository Trust Company's book-entry system and follow such other directions as instructed by The Depository Trust Company.
1980), aff'g 70TC 715 (1978), in which the taxpayers prevailed because corporate obligations under a complete redemption did not (1) create a proprietary interest, (2) become subordinate to general creditors' claims or (3) retain an interest other than that of a creditor.
a mandatory redemption totalling SEK 7 billion, which is equivalent to SEK 35 per share.
Typically, the parties have resolved the first issue by negotiating a stock transfer or stock redemption in their divorce agreement.
Quinlivan, section 302(b)(3) also applies to a part sale, part redemption transaction if, as is typical, the steps are part of an integrated plan; in these cases, the step-transaction doctrine treats the steps as a unit for purposes of determining eligibility for section 302(b)(3) treatment.