Callable Bond

Discipline: Economics

A Callable Bond is a bond whose issuer reservers a contractual right to pay off all or part of the obligation before the due date comes.

Issuers usually 'call' a callable bond when the bond's interest rate exceeds that of the market. After closing the high-interest rate bond, the company can issue a new bond with the currently lower market rate, and save money.

Also see: bond, bond market, bond prices, bond ratings

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