BROWSE

Call Risk

What is 'Call Risk'

The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem the issue prior to maturity. This means the bondholder will receive payment on the value of the bond and, in most cases, will be reinvesting in a less favorable environment (one with a lower interest rate).

Explaining 'Call Risk'

Typically, bond issuers will call a bond because of the high rate they are paying on the bond. If interest rates have declined since it first issued the bonds, issuers will often call the bond once it becomes callable and will create a new issue at a lower rate. The bondholders will then lose out on the high rate of their bond and will have to invest in a lower rate environment.


Further Reading


The effects of default and call risk on bond duration
www.sciencedirect.com [PDF]
… Volume 33, Issue 9, September 2009, Pages 1700-1708. Journal of Banking & Finance … They argue that, at the firm level, as the interest rate goes up, a firm's financing costs rise and its … or > ) D m M , nc and default risk will reduce (or lengthen) duration in the absence of call risk …

High-yield bond default and call risksHigh-yield bond default and call risks
www.mitpressjournals.org [PDF]
… Volume 33, Issue 9, September 2009, Pages 1700-1708. Journal of Banking & Finance … They argue that, at the firm level, as the interest rate goes up, a firm's financing costs rise and its … or > ) D m M , nc and default risk will reduce (or lengthen) duration in the absence of call risk …

Fair value of liabilities: the financial economics perspectiveFair value of liabilities: the financial economics perspective
www.tandfonline.com [PDF]
… Volume 33, Issue 9, September 2009, Pages 1700-1708. Journal of Banking & Finance … They argue that, at the firm level, as the interest rate goes up, a firm's financing costs rise and its … or > ) D m M , nc and default risk will reduce (or lengthen) duration in the absence of call risk …

Put-call parity and market efficiencyPut-call parity and market efficiency
www.jstor.org [PDF]
… Volume 33, Issue 9, September 2009, Pages 1700-1708. Journal of Banking & Finance … They argue that, at the firm level, as the interest rate goes up, a firm's financing costs rise and its … or > ) D m M , nc and default risk will reduce (or lengthen) duration in the absence of call risk …

Determinants of the call option on corporate bondsDeterminants of the call option on corporate bonds
www.sciencedirect.com [PDF]
… Volume 33, Issue 9, September 2009, Pages 1700-1708. Journal of Banking & Finance … They argue that, at the firm level, as the interest rate goes up, a firm's financing costs rise and its … or > ) D m M , nc and default risk will reduce (or lengthen) duration in the absence of call risk …

Call options and the risk of underlying securitiesCall options and the risk of underlying securities
www.sciencedirect.com [PDF]
… Volume 33, Issue 9, September 2009, Pages 1700-1708. Journal of Banking & Finance … They argue that, at the firm level, as the interest rate goes up, a firm's financing costs rise and its … or > ) D m M , nc and default risk will reduce (or lengthen) duration in the absence of call risk …

Arbitrage-free approximation of call price surfaces and input data riskArbitrage-free approximation of call price surfaces and input data risk
www.tandfonline.com [PDF]
… Volume 33, Issue 9, September 2009, Pages 1700-1708. Journal of Banking & Finance … They argue that, at the firm level, as the interest rate goes up, a firm's financing costs rise and its … or > ) D m M , nc and default risk will reduce (or lengthen) duration in the absence of call risk …

Credit risk and liquidation cost: Effects on prices of convertible bonds, as well as conversion and call strategies.Credit risk and liquidation cost: Effects on prices of convertible bonds, as well as conversion and call strategies.
elibrary.ru [PDF]
… Volume 33, Issue 9, September 2009, Pages 1700-1708. Journal of Banking & Finance … They argue that, at the firm level, as the interest rate goes up, a firm's financing costs rise and its … or > ) D m M , nc and default risk will reduce (or lengthen) duration in the absence of call risk …

Big data, computational science, economics, finance, marketing, management, and psychology: connectionsBig data, computational science, economics, finance, marketing, management, and psychology: connections
www.mdpi.com [PDF]
… Volume 33, Issue 9, September 2009, Pages 1700-1708. Journal of Banking & Finance … They argue that, at the firm level, as the interest rate goes up, a firm's financing costs rise and its … or > ) D m M , nc and default risk will reduce (or lengthen) duration in the absence of call risk …

Living in the world risk society: A Hobhouse Memorial Public Lecture given on Wednesday 15 February 2006 at the London School of EconomicsLiving in the world risk society: A Hobhouse Memorial Public Lecture given on Wednesday 15 February 2006 at the London School of Economics
www.tandfonline.com [PDF]
… Volume 33, Issue 9, September 2009, Pages 1700-1708. Journal of Banking & Finance … They argue that, at the firm level, as the interest rate goes up, a firm's financing costs rise and its … or > ) D m M , nc and default risk will reduce (or lengthen) duration in the absence of call risk …


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