Call Privilege

Call Privilege
The provision in a bond indenture that gives the bond issuer the option to redeem all or part of the bond issue, at pre-determined prices on certain specified dates. These dates are known as "call dates" and form the call schedule. The term "call privilege" derives its name from the fact that the issuer's option to redeem the bond issue, is akin to a call option on the bonds. In return for this privilege, the issuer will generally pay a coupon rate that is higher than that paid by straight bonds of comparable maturity and credit quality.

The pre-determined price at which a bond can be called is generally higher than the par or issue price. This call premium is demanded by investors to justify the risk involved in holding bonds that have call privileges embedded in them. Since an issuer is quite likely to exercise its call privilege when prevailing interest rates are significantly lower than they were at the time the bond was issued, buyers of callable bonds have to deal with reinvestment risk, or the risk of investing bond proceeds at lower interest rates. In the case of bonds that contain call privileges, "yield to call" may be a better measure of the yields that investors can expect from such bonds, rather than "yield to maturity."


Investment dictionary. . 2012.

Игры ⚽ Поможем написать курсовую

Look at other dictionaries:

  • Privilege — Priv i*lege, n. [F. privil[ e]ge, L. privilegium an ordinance or law against or in favor of an individual; privus private + lex, legis, law. See {Private}, and {Legal}.] [1913 Webster] 1. A peculiar benefit, advantage, or favor; a right or… …   The Collaborative International Dictionary of English

  • Call — Call, n. 1. The act of calling; usually with the voice, but often otherwise, as by signs, the sound of some instrument, or by writing; a summons; an entreaty; an invitation; as, a call for help; the bugle s call. Call of the trumpet. Shak. [1913… …   The Collaborative International Dictionary of English

  • Call bird — Call Call, n. 1. The act of calling; usually with the voice, but often otherwise, as by signs, the sound of some instrument, or by writing; a summons; an entreaty; an invitation; as, a call for help; the bugle s call. Call of the trumpet. Shak.… …   The Collaborative International Dictionary of English

  • Call boy — Call Call, n. 1. The act of calling; usually with the voice, but often otherwise, as by signs, the sound of some instrument, or by writing; a summons; an entreaty; an invitation; as, a call for help; the bugle s call. Call of the trumpet. Shak.… …   The Collaborative International Dictionary of English

  • Call note — Call Call, n. 1. The act of calling; usually with the voice, but often otherwise, as by signs, the sound of some instrument, or by writing; a summons; an entreaty; an invitation; as, a call for help; the bugle s call. Call of the trumpet. Shak.… …   The Collaborative International Dictionary of English

  • Call of the house — Call Call, n. 1. The act of calling; usually with the voice, but often otherwise, as by signs, the sound of some instrument, or by writing; a summons; an entreaty; an invitation; as, a call for help; the bugle s call. Call of the trumpet. Shak.… …   The Collaborative International Dictionary of English

  • Call to the bar — Call Call, n. 1. The act of calling; usually with the voice, but often otherwise, as by signs, the sound of some instrument, or by writing; a summons; an entreaty; an invitation; as, a call for help; the bugle s call. Call of the trumpet. Shak.… …   The Collaborative International Dictionary of English

  • privilege — [priv′ə lij, priv′lij] n. [OFr < L privilegium, an exceptional law for or against any individual < privus, PRIVATE + lex (gen. legis), law: see LEGAL] 1. a right, advantage, favor, or immunity specially granted to one; esp., a right held by …   English World dictionary

  • Call gate — A call gate (or callgate) is a mechanism in Intel s x86 architecture for changing the privilege level of the CPU when it executes a predefined function call using a CALL FAR instruction. Overview Call gates are intended to allow less privileged… …   Wikipedia

  • Privilège de secret d'État — L affaire United States v. Reynolds (en) de 1953 impliquait une action au civil contre le gouvernement des États Unis de veuves de militaires décédés lors d un accident d un …   Wikipédia en Français

Share the article and excerpts

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