Redemption

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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 two issues, wrote the court, "are not ineluctably linked." In fact, it decided that the transactions were entirely separate; even though, under the ESOP, a convertible preferred stock redemption was required when a person left the company, a distribution did not automatically follow.
If a shareholder sells all his or her stock and completely terminates ownership of the corporation, the redemption is treated as an exchange.
Corporate distributions in redemption of stock may be characterized either as a sale (i.e., capital gain) or a dividend.
Distribution rule: Under this rule, a partnership's distribution to a partner of partner stock is treated as a redemption or exchange for a portion of the partner's partnership interest; the Sec.
Typically, the parties have resolved the first issue by negotiating a stock transfer or stock redemption in their divorce agreement.
Y argues that it did not acquire an interest in a trade or business in the redemption, because, both before and after the redemption, it was engaged in the same trade or business and acquired no new assets.
The final regulations are effective for redemptions occurring on or after Jan.
The most common type of buy-sell agreement is the redemption agreement.
As previously announced, Unisys has also called for redemption all $183,106,000 of its 12 3/4% senior secured notes due 2014.
The second corporation then redeems its stock held by the first corporation, and the first corporation treats the redemption as a dividend, because it is related to the U.S.
Commentators argued that the temporary regulations were too broad and should instead have been based on the "solely for voting stock" requirement: Pre-reorganization redemptions and extraordinary distributions by a target should not be taken into account for COI purposes, unless an acquiring corporation directly or indirectly furnishes the consideration for the redemption or distribution.
In January 1998, the IRS published temporary and proposed regulations (TD 8761) dealing with the application of the continuity-of-shareholder-interest (COSI) requirement in the context of pre-reorganization redemptions and extraordinary distributions.