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.

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.

For example, a bond issuer may choose to redeem a certain issue when the current market rate falls below the coupon rate of the bond by a set amount. This allows the issuer to reissue the bonds at a lower rate and avoid paying a higher interest rate.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Callable — A financial security such as a bond with a call option attached to it, i.e., the issuer has the right to call the security. The New York Times Financial Glossary * * * callable call‧a‧ble [ˈkɔːləbl ǁ ˈkɒːl ] adjective FINANCE if a loan, bonds,… …   Financial and business terms

  • callable — Applies mainly to convertible securities ( convertible security). redeemable by the issuer before the scheduled maturity under specific conditions and at a stated price ( stated value), which usually begins at a premium to par and declines… …   Financial and business terms

  • Callable Common Stock — A security that represents ownership in a corporation that has voting rights, whose owners are last to be paid if the company liquidates and which is redeemable by the issuing corporation, at a predetermined price or at a premium to the current… …   Investment dictionary

  • Security (finance) — This article is about the negotiable instrument. For the legal right given to a creditor by a borrower, see Security interest. Securities Securities Bond …   Wikipedia

  • Callable Preferred Stock — A type of preferred stock that carries the provision that the issuer has the right to call in the stock at a certain price and retire it. Also known as redeemable preferred stock . You can think of preferred stock as a security somewhere in… …   Investment dictionary

  • callable — Option to pay before maturity on call. A security (e.g. bond) issue, all or part of which may be redeemed by the issuing corporation under definite conditions before maturity. The term also applies to preferred shares which may be redeemed by the …   Black's law dictionary

  • Mortgage-backed security — Securities Securities Bond Stock Investment fund Derivative Structured finance Agency security …   Wikipedia

  • United States Treasury security — A United States Treasury security is government debt issued by the United States Department of the Treasury through the Bureau of the Public Debt. Treasury securities are the debt financing instruments of the United States federal government, and …   Wikipedia

  • Noncallable — 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. If interest rates …   Investment dictionary

  • Deferment Period — 1. A time during which a borrower does not have to pay interest or repay the principal on a loan. Deferment is common with student loans, and may be granted while the student is still in school or just after graduation when the student has few… …   Investment dictionary

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.