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What are callable and non callable bonds?

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What are callable and non callable bonds?
posted Jul 10, 2017 by Vijay

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A callable bond (also called redeemable bond) is a type of bond (debt security) that allows the issuer of the bond to retain the privilege of redeeming the bond at some point before the bond reaches its date of maturity.Thus, the issuer has an option which it pays for by offering a higher coupon rate.

A financial security that cannot be redeemed early by the issuer. The issuer of a noncallable bond subjects itself to interest rate risk because, at issuance, it locks in the interest rate it will pay until the security matures. Corporate bonds are the most common type of security that carries call provisions.

answer Jul 11, 2017 by Tanmay