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Why would a firm wish to call a bond in before its maturity date?
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What provision allows the issuer to redeem the bond before its maturity at a specified price?
Call Provision
What is a non call life bond?
A noncallable bond is a debenture which the company or institution that issued it cannot force you to redeem before the final call date (i.e. they can't call it). For example, if you purchased a 30-year bond in 2005 with a 4.5% coupon, the issuer today would like to call that bond because they can borrow money more cheaply (i.e. at a lower interest rate). But if the bond is noncallable they cannot do that. The trade-off is that a noncallable bond generally has a slightly lower nominal coupon.
What do you call a Loan to the government?
A loan made to the goverment is done in the form of a bond. So if you are in the situation where you are loaning to the government it would be called a bond.
Do bonds with quarterly coupons have lower yields than those with semi-annual coupons?
Yields on bonds are independent of the frequency of coupon payment. The most used by professionals yield to worst (maturity or call date) depends only on the perceived riskiness of the bond and the supply and demand conditions for the bond.
What do you call a bond that can be changed into a specified number of shares of the issuers common stock?
Such a bond is an convertible bond.
What is a call date?
A call date is a date on which a callable bond may be redeemed before its maturity.
What provision allows the issuer to redeem the bond before its maturity at a specified price?
Call Provision
Yield to maturity vs yield to call?
Yield to maturity assumes that the bond is held up to the maturity date. This is a disadvantage. If the bond is a yield to call , it can be called prior to the maturity date. Thus, the ivestor should sell the callable bond prior to maturity if he expects that he will earn higer return by doing so (in other words when yeild to call is higher than held to maturity).
What is the difference between yield to maturity and yield to call?
Yield to maturity means the interest rate for which the present value of the bond's payments equals the price. It's considered as the bond's internal rate of return. Yield to. call is a measure of the yield of a bond, to be held until its call date.
What is the risk of a municipal bond?
---- Depending on the number of days to call (or maturity), coupon rate, and price paid, any bond will have a different yield to worst (the lower of the yield to maturity or yield to call). If you decide to hold the bond to the potential call date or maturity date, the only risk assumed will be the risk of the issuer's default or coupon reset. This risk is qualified by rating agencies, such as Standard & Poor's, with bond ratings like AAA or BB, etc. AAA municipal bonds are commonly insured against the issuer's default. If you want to sell a municipal bond before the maturity or call date, you additionally bear the market risk of price fluctuations. These fluctuations will be mainly due to expectations about future interest rate changes in the market (e.g., Fed Fund Rate by FOMC).
What is a non call life bond?
A noncallable bond is a debenture which the company or institution that issued it cannot force you to redeem before the final call date (i.e. they can't call it). For example, if you purchased a 30-year bond in 2005 with a 4.5% coupon, the issuer today would like to call that bond because they can borrow money more cheaply (i.e. at a lower interest rate). But if the bond is noncallable they cannot do that. The trade-off is that a noncallable bond generally has a slightly lower nominal coupon.
What would you call the James Bond series?
Icoliogy
What is a call value?
While calling a function, if the arguments supplied are the original values it is called call by value. e.g. int sum(int a, int b) { return (a+b); } int main() { int a=10; int b=20; printf("Sum is %d",sum(a,b)); return 1; }
What are pre-refunded municipal bonds?
When a municipality has sufficient funds but cannot call the bond before the maturity, it can buy Treasuries, place them in an escrow account, and use the interest proceeds to pay the muni interest. Such process makes the pre-res almost as safe as US Treasuries, but tax-free. At the maturity of the munis a municipality will sell Treasuries and buy back the muni bonds with the proceeds.
What are pre refunded municipal bonds?
When a municipality has sufficient funds but cannot call the bond before the maturity, it can buy Treasuries, place them in an escrow account, and use the interest proceeds to pay the muni interest. Such process makes the pre-res almost as safe as US Treasuries, but tax-free. At the maturity of the munis a municipality will sell Treasuries and buy back the muni bonds with the proceeds.
What happens when a yield to maturity is less than the yield to call?
The issuer will call the bonds and issue new bonds to the maturity date.
Will a call provision increase or decrease the yield to maturity at which a firm can issue a bond?
Callable bonds will pay a higher yield than comparable non-callable bonds. Take from answers.com
