Callable


Also found in: Dictionary, Thesaurus.
Related to Callable: callable stock, callable CD

Callable

Applies mainly to convertible securities. Redeemable by the issuer before the scheduled maturity under specific conditions and at a stated price, which usually begins at a premium to par and declines annually. Bonds are usually called when interest rates fall so significantly that the issuer can save money by issuing new bonds at lower rates.

Callability

A provision in an indenture that allows a bond to be redeemed before maturity. Callability allows the bond to be called at the discretion of the issuer, within certain limits. When the bond is called, the bondholder receives the par value (or sometimes slightly more) and does not receive any more coupons. Callable bonds are issued to allow the issuers to hedge against interest rate risk. That is, if interest rates fall significantly, they can call the bond and issue a new bond at a lower interest rate, reducing their liabilities. However, to protect the bondholder, most callable bonds also include call protection, which prevents the bonds from being called for a certain period of time and thereby guarantees the current interest rate for that time.

Callable

A bond issue, all or part of which may be redeemed before maturity by the issuing corporation under specific conditions. The term also applies to preferred shares of stock, which may be redeemed by the issuing corporation.
References in periodicals archive ?
Thanks to its merits of simple operation and low investment cost, callable bull/bear contracts have been developing rapidly since their debut in Hong Kong in 2006.
A callable bull/bear contract is a derivative that provides investors with a leveraged investment in underlying assets, which can be a single stock or an index.
The notes, which are callable in 2017, will have a fixed interest rate at first, and a floating-rate interest based on the three-month Libor at a later stage.
Interest rate hedging is often thought to be the reason for callable bond issues.
First, most of the empirical studies use data from the 1970s and 1980s, decades where most bond issues were callable.
Callable CDs are long-term, can be redeemed or "called" by the issuing company and the principal value fluctuates, unlike ordinary CDs.
Edwards, about the sale of callable CDs to elderly investors.
Most callable bonds research focuses on explaining the call's existence, developing theoretical models based on option pricing theory, explaining corporate decisions surrounding the call, or analyzing stock market reactions to bond-related announcements.
In our sample, the numbers of callable bonds and noncallable bonds are about equal, greatly improving the reliability of the inferences.