Noncallable
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Noncallable
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
Noncallable
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
noncallable (NC)
A provision of some bond and preferred stock issues that prohibits the issuer from redeeming the security before a certain date, or, in some cases, until maturity. A noncallable provision operates to the advantage of the investor. Compare nonrefundable.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
Noncallable.
When a bond is noncallable, the issuer cannot redeem it before the stated maturity date. Some bonds have call protection for their full term, and others for a fixed period -- often ten years.
The appeal of a noncallable bond is that the issuer will pay interest at the stated coupon rate for the bond's full term. In contrast, if a bond is called, you receive a lump-sum repayment of principal, which you must reinvest.
Frequently, rates are lower at call that they were when the bond was issued, which means your reinvested principal will provide a smaller yield.
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