Non-Callable Bond

Non-Callable Bond

A bond whose holder is not permitted to exchange it with the issuer in return for its face value. Non-callable bonds may be either traded or held to maturity. A non-callable bond should not be confused with a nonnegotiable security.
References in periodicals archive ?
Since the investor faces the risk of an uncertain stream of cash flows, the common market practice is to demand a higher yield in a callable bond than in a non-callable bond in order to compensate the higher risk caused by the embedded call options in a specific issue.
In common practice, the credit and liquidity risk of any common non-callable bond is determined by the additional yield spread paid by that bond when compared to the yield of a risk-free bond with a similar maturity date (i.
Thus, a mortgage effectively is composed of a long-term non-callable bond plus an embedded call option that gives the mortgager the right (but not the obligation) to buy back (call) the bond at par.
In this study, the authors test whether callable bonds have lower agency costs of debt than non-callable bonds.
That is, the authors empirically test whether callable bonds have lower agency costs of debt than non-callable bonds.
They use a theoretical, tax-timed, bond-pricing model and show that a comparison of callable bonds with non-callable bonds that mature on the first call date provides a valuation for an implied put option.

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