call risk

Call risk

The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Call Risk

A risk that a callable bond will be repaid early and that the money earned may not be able to be reinvested in a security with a comparable return. Suppose one invests in a callable bond with coupon payments of 4%. However, interest rates fall and the issuer calls the bond and pays the par value. The investor may make a profit, but now he/she may only purchase a bond with a coupon of 2.5%. Most callable bonds include call periods in the indenture, protecting the bondholder from this risk for a certain period of time. Call risk is one of the most common kinds of reinvestment risk.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

call risk

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.
References in periodicals archive ?
Given SBSI's moderately-sized and comparatively longer duration investment portfolio, the potential for spread earnings contraction from call risk may be elevated if the low rate environment persists over an extended period.
TrustID's software-as-a-service products provide a layer of protection for the call centers of organizations that deal with customers' sensitive personal information and that must authenticate or identify callers and assess call risk. TrustID has developed a patented telephone network forensic approach that enhances security, improves customer interactions and agent experience, and reduces costs in the phone channel.
As of now, many of our operators have not established what we call risk culture.
There are many factors to consider when choosing an appropriate bond in which to invest, including credit rating, type of bond, coupon rate, price, call risk and more, so it is important to consult with an advisor with " experience with municipal bond direct investments.
Basically, this new method, which we call risk accounting, adapts the management accounting system so that the information typically attached to a transaction when it's registered in a bank's system (product, customer, market segment etc) is complemented by information on risk that's triggered when the transaction is accepted.
Developing a functional portfolio that complements your core business entails looking at duration risk, call risk, liquidity risk extension risk just to name a few basic metrics.
"I regard myself as part of a movement we call risk literacy.
Often, when I have discovered them struggling with risk mitigation, I have asked, "Why didn't you call risk management?" The response is always the same: "Because they would have just told me all of the reasons not to do the project.
Someone call risk management!) a bee stung my horse.
"Risk management is fundamental to our business, so our entire executive staff address many of the items that you would call risk management as key areas of focus," Sandhu says.
In particular, they are designed to protect against call risk for 1 0 years or so and to return principal in a way that can be predicted.