Sentences with phrase «callable bonds»

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.

For example, Company A issues callable bonds with an 8 % interest rate.

Yields on callable bonds tend to be higher than yields on noncallable, «bullet maturity» bonds because the investor must be rewarded for taking the risk the issuer will call the bond if interest rates decline, forcing the investor to reinvest the proceeds at lower yields.

To take advantage of lower rates in the future, ABC issues callable bonds.

Usually, issuers only redeem callable bonds early when it is beneficial to them as a business.

Two yield calculations are generally evaluated when it comes to selecting callable bonds for a portfolio: yield to maturity and yield to call.

Similar issues arise for callable bonds in the American municipal, corporate, and government agency sectors.

Two yield calculations are generally evaluated when it comes to selecting callable bonds for a portfolio: yield to maturity and yield to call.

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.

Pricing Callable Bonds with Stochastic Interest Rate and Stochastic Default Risk: A 3D Finite Difference Model by David Wang of Hsuan Chuang University (62K PDF)-- 10 pages — February 2005

As a result, callable bonds often have a higher annual return to compensate for the risk that the bonds might be called early.

Issuers can redeem callable bonds prior to maturity.

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.

For example, callable securities (like callable bonds and redeemable preferred stock) carry extra reinvestment risk because if they are called away, the investor will not even collect all the expected interest payments, much less reinvest them effectively.

Option free bonds have positive convexity; bonds with embedded options, such as callable bonds and mortgage - backed securities, have negative convexity, meaning the graph of the relationship between their price and yield is convex rather than concave.

Callable bonds also have a higher coupon rate than other bonds.

How about diminimis gains on discounted muni bonds and continuous callable bonds after a specific year despite the bonds call date.

(To learn more about callable bonds, read Bond Call Features: Don't Get Caught Off Guard.)

Meanwhile, you're very happy with the higher rate that callable bonds customarily pay.

Issuers of callable bonds may choose to refinance by calling their existing bonds so they can lock in a lower interest rate.

The bonds are replaced with new callable bonds issued at the lower rate.

Another potential risk is that during periods of falling interest rates, an issuer of a callable bond may exercise its right to pay principal on an obligation earlier than expected.

Callable bonds (also called redeemable bonds) can be redeemed by the issuer earlier than the maturity date, usually at the choice of the issuer.

Primarily this would occur when there is a drop in interest rates — issuers often redeem the callable bond and issue another one at the new, lower interest rate.

A callable bond always bears some probability of being called before the maturity date.

Callable bonds are more risky for investors than non-callable bonds because an investor whose bond has been called is often faced with reinvesting the money at a lower, less attractive rate.

Learn the difference between a normal bond and a callable bond.

If a company issues a «Callable Bond», it means that it can be redeemed by the Issuer (company) before the bond's maturity.

Reinvestment risk may be greater with callable bonds than other types of bonds.

Callable bonds are able to be purchased back by the company before they mature, potentially exposing investors to the risk of being forced to sell a good investment.

In the context of an MBS or callable bond, the embedded option relates primarily to the borrower's right to refinance the debt at a lower interest rate.

Check to see if you are investing in a callable bond and consider what types of bonds you may want to think about investing in advance to offset any potential decrease in interest income if the bond is called.

Declining interest rates may accelerate the redemption of a callable bond, causing an investor's principal to be returned sooner than expected.

Having a callable bond means that you may not earn as much interest on the bond investment as you had expected.

Callable bonds are riskier than non-callable bonds, for example, and therefore offer a higher yield, particularly if the call date is soon and interest rates have declined since the bond was issued, making it more likely to be called.

Callable bonds can not be recalled at any time by the bond issuer.

Callable bonds are those bonds that can be called back by the issuer of the bond before the end of the maturity date.

If interest rates drop, the bond's issuer will be strongly motivated to save money by replaying it callable bonds and issuing new ones at lower coupon rates.

A callable bond is worth less to an investor than a noncallable bond because the company issuing the bond has the power to redeem it and deprive the bondholder of the additional interest payments he'd be entitled to if the bond was held to maturity.

Any bond, no matter government or corporate, can be callable bonds.

Callable bonds are canceled and not brought back by the bond issuer.

Declining interest rates may accelerate the redemption of a callable bond, causing the investor's principal to be returned sooner than expected.

Sell also Call price and Callable bond.

A callable bond with a call price based on the greater of (a) par or (b) the price based on the yield of an equivalent - term Government of Canada bond plus a specified yield spread.

Callable bonds — Bonds that the issuer can call back from debtholders if interest rates fall to some stipulated extent.

The issuer of your callable bond is insuring that if interest rates decline, they can call in your bond and issue new bonds with a lower coupon.

I know intuitively that callable bonds have higher yields than a comparable bullet, but I'm having trouble seeing that on excel.

Callable bonds can be redeemed by the issuer before the maturity date, exposing you to interest rate risk.

If you have a callable bond, keep up with interest rates and have a plan to invest the proceeds if the bond is called.