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Callable Security

What is 'Callable Security'

A security with an embedded call provision that allows the issuer to repurchase or redeem the security by a specified date. Since the holder of a callable security is exposed to the risk of the security being repurchased, the callable security is generally less expensive than comparable securities that do not have a call provision.

Explaining 'Callable Security'

The conditions of the call provision are established at the time the security is issued. Callable securities are commonly found in the fixed-income markets and allow the issuer to protect itself from overpaying for debt.


Further Reading


Callable convertible debt under managerial entrenchment
www.sciencedirect.com [PDF]
… While callable convertible debt is an effective financial instrument for an entrenched manager, it is not desirable … Journal of Financial Economics 3 (1976), pp … 1996 K. Jung, Y.-C. Kim, R. StulzTiming investment opportunities, managerial discretion, and the security issue decision …

Callable bonds: A risk‐reducing signalling mechanismCallable bonds: A risk‐reducing signalling mechanism
onlinelibrary.wiley.com [PDF]
… While callable convertible debt is an effective financial instrument for an entrenched manager, it is not desirable … Journal of Financial Economics 3 (1976), pp … 1996 K. Jung, Y.-C. Kim, R. StulzTiming investment opportunities, managerial discretion, and the security issue decision …

A model for designing callable bonds and its solution using tabu searchA model for designing callable bonds and its solution using tabu search
www.sciencedirect.com [PDF]
… While callable convertible debt is an effective financial instrument for an entrenched manager, it is not desirable … Journal of Financial Economics 3 (1976), pp … 1996 K. Jung, Y.-C. Kim, R. StulzTiming investment opportunities, managerial discretion, and the security issue decision …

Are negative option prices possible? The callable US Treasury-Bond puzzleAre negative option prices possible? The callable US Treasury-Bond puzzle
www.jstor.org [PDF]
… While callable convertible debt is an effective financial instrument for an entrenched manager, it is not desirable … Journal of Financial Economics 3 (1976), pp … 1996 K. Jung, Y.-C. Kim, R. StulzTiming investment opportunities, managerial discretion, and the security issue decision …

Evaluation of callable bonds: Finite difference methods, stability and accuracyEvaluation of callable bonds: Finite difference methods, stability and accuracy
academic.oup.com [PDF]
… While callable convertible debt is an effective financial instrument for an entrenched manager, it is not desirable … Journal of Financial Economics 3 (1976), pp … 1996 K. Jung, Y.-C. Kim, R. StulzTiming investment opportunities, managerial discretion, and the security issue decision …

The choice between callable and noncallable bondsThe choice between callable and noncallable bonds
onlinelibrary.wiley.com [PDF]
… While callable convertible debt is an effective financial instrument for an entrenched manager, it is not desirable … Journal of Financial Economics 3 (1976), pp … 1996 K. Jung, Y.-C. Kim, R. StulzTiming investment opportunities, managerial discretion, and the security issue decision …

Savings bonds, retractable bonds and callable bondsSavings bonds, retractable bonds and callable bonds
www.sciencedirect.com [PDF]
… While callable convertible debt is an effective financial instrument for an entrenched manager, it is not desirable … Journal of Financial Economics 3 (1976), pp … 1996 K. Jung, Y.-C. Kim, R. StulzTiming investment opportunities, managerial discretion, and the security issue decision …

Callable bonds: A risk-reducing signalling mechanism-A replyCallable bonds: A risk-reducing signalling mechanism-A reply
www.jstor.org [PDF]
… While callable convertible debt is an effective financial instrument for an entrenched manager, it is not desirable … Journal of Financial Economics 3 (1976), pp … 1996 K. Jung, Y.-C. Kim, R. StulzTiming investment opportunities, managerial discretion, and the security issue decision …

A simple approximation of the value of callable convertible preferred stockA simple approximation of the value of callable convertible preferred stock
www.jstor.org [PDF]
… While callable convertible debt is an effective financial instrument for an entrenched manager, it is not desirable … Journal of Financial Economics 3 (1976), pp … 1996 K. Jung, Y.-C. Kim, R. StulzTiming investment opportunities, managerial discretion, and the security issue decision …



Q&A About Callable Security


Who can issue securities with a call feature?

The issuer of the bond can be any entity, but it is most commonly found in fixed income markets.

How are investors protected from overpaying for debt?

Callable securities allow issuers to protect themselves from overpaying for debt.

What does it mean for an investor to be exposed to risk of being called?

An investor who holds a callable security has exposure to the risk that they will have their investment returned before maturity.

What is a callable security?

A callable security is a security with an embedded call provision that allows the issuer to repurchase or redeem the security by a specified date.

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