| Dictionary, Encyclopedia and Thesaurus - The Free Dictionary 1,885,393,812 visitors served. |
|
Dictionary/ thesaurus | Medical dictionary | Legal dictionary | Financial dictionary | Acronyms | Idioms | Encyclopedia | Wikipedia encyclopedia | ? |
Callable Bond |
Also found in: Wikipedia | 0.01 sec. |
Callable bond. A callable bond can be redeemed by the issuer before it matures if that provision is included in the terms of the bond agreement, or deed of trust. Bonds are typically called when interest rates fall, since issuers can save money by paying off existing debt and offering new bonds at lower rates. If a bond is called, the issuer may pay the bondholder a premium, or an amount above the par value of the bond. Callable Bond What Does Callable Bond Mean? A bond that can be redeemed (called) by the issuer before its maturity; usually a premium is paid to the bond owner when the bond is called. Also referred to as a redeemable bond. Investopedia explains Callable Bond The main reason a bond is called by an issuer is a decline in interest rates. If interest rates have declined since a company first issued its bonds, it probably will want to refinance the debt at a lower rate of interest. In this case, the company will call its current bonds and reissue new bonds at a lower rate of interest. This saves the issuer money by lowering the interest payments on the bonds. Related Terms: How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
|
| ? Mentioned in | ? References in periodicals archive | |
|---|---|---|
The limitation of the price appreciation potential for a callable bond in a declining interest rate environment, based on the expectation that the bond will be redeemed at the call price. Banks generally retire such callable bonds at the first available date, paying a small premium to do so, but at current wholesale interest rates RBS is under no great pressure to do so. On a parallel scale, as per the previous legislation conversions could also be conducted through instalments in callable bond issues provided that each conversion is conducted on the date designated for annual interest payment. |
| Financial Dictionary |
| Free Tools: |
For surfers:
Free toolbar & extensions |
Word of the Day |
Help
For webmasters: Free content | Linking | Lookup box | Double-click lookup | Partner with us |
|---|