"Callable" refers to an option or a financial security that gives the issuer the right to redeem or call it back before its agreed maturity date. In simple terms, it means that the issuer has the ability to buy back the security or option early.
Full definition
In reality, prices of
callable bonds are unlikely to move much above the call price if lower interest rates make the bond likely to be called.
They must also have views on the likely range of rates over the investment period and the market's perception of future rate uncertainty at the horizon date for reasons explained in Risks of Investing in
Callable Securities above.
Issuers
of callable bonds may choose to refinance by calling their existing bonds so they can lock in a lower interest rate.
She said you should make a list of your debts, order your debts from highest interest rates to lowest, make your minimum payments on all of your debts but pay extra on your highest interest rate
callable debt.
If an investor has the view that rates may well be volatile in either direction over the near term but are likely to remain in a definable range over the next year, an investment
in callable securities can significantly enhance returns.
The takeover premium may push the stock price above the threshold when the warrants become
callable at a nominal consideration by the company.
Assuming you like the company's fundamentals and the convertible shares are
n't callable for several years, should you buy the convertible or the common stock?
Similar issues arise
for callable bonds in the American municipal, corporate, and government agency sectors.
For this reason, the rates
on callable CDs are often higher than traditional CDs.
It is important to note that the price of
callable preferred stock is affected by whether the call option is in the money, at the money or out of the money.
However, in addition to fixed rate coupon and non
callable agency bonds, agencies do structure their bond issues to meet different investor needs.
Like a fixed
rate callable CD, it is difficult to project when a CD might be called.
c is a conversion factor equal to the price at which a bond with the same time to maturity as said bond or,
if callable, same time to first call (as per Rule 18101.
Discount callables trade like bullets — non-callable bonds — to maturity and carry compression risk.
Usually, issuers only
redeem callable bonds early when it is beneficial to them as a business.
Estimating the Term Structure of Yield Spreads from
Callable Corporate Bond Price Data by Antje Berndt of Cornell University (402K PDF)-- 43 pages — December 16, 2004
I just wanted to add that in my country (Italy) the emergency number is not
callable from a cellphone without sim - card: Way too many people just used this to make false alarms
Premium callables trade at «yield to call» — meaning that the price of the bond is calculated with the assumption that the bond will be called — and carry extension risk.
This means that the market expects interest rates at the time the bond
becomes callable will be such that the issuer will not exercise its option.
For bonds with embedded options (for
example callable or puttable bonds), the duration measure must be adjusted to account for the fact that the bond's embedded options may change the expected cash flows of the bond.
In addition, long - term municipal bonds are usually
callable by the issuer starting in the 10th year.
Two yield calculations are generally evaluated when it comes to
selecting callable bonds for a portfolio: yield to maturity and yield to call.
While callable CDs give you a higher rate than usual, no penalty CDs offer below - average rates to compensate for the increased flexibility you get with the option to withdraw.
In addition, corporate bonds are
often callable before maturity, meaning an issuer can pay off its bonds early.
Call Risk Appears Limited for Preferreds Both preferreds and high yield bonds share call risk, though preferreds tend to have
more callable issues.
When rates drop to 6 %, the company calls the bonds, pays each investor his principal and a small call premium, and then issues
new callable bonds with a 6 % interest rate.
Bank of Montreal Covered Call Canadian High
Dividend Callable Equity Income Principal At Risk Notes, Series 607 (CAD)(F - Class)
Bank of Montreal Covered Call Canadian High Dividend
Callable Equity Income Principal At Risk Notes, Series 606 (CAD)
Gail's advice is to make an inventory of your debts, make minimum payments on all of your debts and devote all of your extra money to your high
interest callable debts.
High - yield bonds are typically issued with maturities of 10 years or less, and are
callable after four to five years.
The spread or difference in yield over comparable noncallable securities compensates
callable investors for this «negative convexity.»
Grasso owns
Callable Trigger contingent yield note linked to SPX, RTY, and MXEA.
But in the short run, there are already practical applications, such as 21 Inc.'s marketplace for
callable APIs (application program interfaces) that charge bitcoin micropayments for their services.
Discover five things you must know before investing and
why callable bond lives a double - life that contains so much risks.
Currently, the bonds eligible for inclusion in the index include high yield bonds that are issued by companies domiciled in the U.S. and Canada, and that are: fixed rate (
including callable bonds); have a maximum rating of Ba1 / BB + by both Moody's Investors Service, Inc. («Moody's») and Standard and Poor's Financial Services, LLC («S&P»); and are subject to minimum issue outstanding, minimum time to maturity and maximum time from issuance criteria.
Call dates are fixed at the time of the CD issue so that you will know the
possible callable dates before you purchase your CD.
The company owns, manages and finances a portfolio of real estate related investments, including mortgage pass - through certificates, collateralized mortgage obligations, Agency
callable debentures and other securities representing interests in or obligations backed by pools of mortgage loans issued or guaranteed by Freddie Mac, Fannie Mae and Ginnie Mae.