Redemption

(redirected from redemptions)
Also found in: Dictionary, Thesaurus, Legal, Encyclopedia, Wikipedia.

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 ?
The Ninth Circuit wrote, "[i]n short, the question of whether the distributions to Participants in this case are deductible dividends under 404(k) depends on whether the Trust or the Participants owned the convertible preferred stock when the redemptions took place.
These conflicting decisions have created a state of confusion on how section 1041 applies to divorce-related stock redemptions.
16 ~PRNewswire~ -- Oakwood Homes Corporation (NYSE: OH) announced today that it plans to call for redemption all of its 6 1~2 percent convertible subordinated debentures due 2012, of which approximately $26,800,000 aggregate principal amount are currently outstanding.
HOUSTON -- Hanover Compressor Company (NYSE:HC) announced today the call for redemption on February 28, 2007, of $29,897,000 aggregate principal amount of the Convertible Junior Subordinated Debentures Due 2029 (the "Debentures").
This provision is supposed to facilitate seller-financed stock redemptions.
One such transaction is the redemption of stock by a corporation.
THE EXERCISE OF THE CALL WARRANTS IS CONDITIONAL UPON RECEIPT BY THE TRUSTEE OF THE WARRANT EXERCISE PURCHASE PRICE WITH RESPECT TO SUCH EXERCISE ON THE REDEMPTION DATE.
The tax adviser has to consider how divorce transfers and transactions affect tax liability and basis, including stock redemptions, transfers in trust, qualified plans and property distributions.
The major advantage of a redemption is its simplicity; only the corporation and the deceased stockholder are involved.
In the preamble to the proposed regulations, the IRS noted the need for regulatory guidance, given the uncertainty created by the courts on marital-retted stock redemptions.
Generally, there are three types of buy-sell agreements: redemption agreements (also called entity agreements), cross-purchase agreements and combination agreements.
356 test of the final regulations difficult to apply with certainty for pre-reorganization redemptions or distributions.