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Is a feature that permits the issuer to repurchase bonds at a stated price prior to maturity?
Call feature.
What provision allows the issuer to redeem the bond before its maturity at a specified price?
Call Provision
What is a callable?
Callable is the designation of a bond that can be paid off earlier than its maturity date.
Why does maturity date change?
It changes when the issuer does not have the money to pay back the principal and wants to still give out coupon on the bonds.
Is an issuer of a bond a lender or borrower?
An issuer of a bond is a borrower. When an entity, such as a corporation or government, issues bonds, it is essentially borrowing money from investors who purchase the bonds. In return for their investment, the issuer agrees to pay back the principal amount at maturity and make periodic interest payments. Thus, the issuer incurs debt while investors become creditors.
Is a feature that permits the issuer to repurchase bonds at a stated price prior to maturity?
Call feature.
What is the difference between a callable bond and a retractable bond?
A callable bond is where the issuer has the ability to redeem the bond prior to maturity. A callable bond is where the bond hold has the ability to force the issuer to redeem the bond before maturity. Hope this helps.
What is a puttable provision?
A puttable provision is a feature in a bond or financial instrument that allows the holder to sell the security back to the issuer at specified times before maturity, typically at face value. This provision provides investors with a degree of protection against rising interest rates or deteriorating credit quality, as they can "put" the bond back to the issuer instead of holding it to maturity. It enhances the bond's attractiveness, often resulting in a lower yield compared to similar securities without such a feature.
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.
What provision allows the issuer to redeem the bond before its maturity at a specified price?
Call Provision
What is a callable?
Callable is the designation of a bond that can be paid off earlier than its maturity date.
Which level of government is most likely to receive revenues from parking permits?
A city government is likely the issuer of parking permits for city streets, and would obtain the revenue.
Why does maturity date change?
It changes when the issuer does not have the money to pay back the principal and wants to still give out coupon on the bonds.
1 Bonds that have an option exercisable by the issuer to retire them at a stated dollar amount prior to maturity are know as?
callable bonds
Is an issuer of a bond a lender or borrower?
An issuer of a bond is a borrower. When an entity, such as a corporation or government, issues bonds, it is essentially borrowing money from investors who purchase the bonds. In return for their investment, the issuer agrees to pay back the principal amount at maturity and make periodic interest payments. Thus, the issuer incurs debt while investors become creditors.
What is the difference between yield to maturity and interest rate in bond investments?
The yield to maturity of a bond is the total return an investor can expect if they hold the bond until it matures, taking into account the bond's price, coupon payments, and time to maturity. The interest rate, on the other hand, is the fixed rate of return that the bond issuer pays to the bondholder periodically. In summary, yield to maturity considers the total return over the bond's life, while the interest rate is the fixed rate paid by the issuer.
What bonds can be recalled before its maturity date?
Bonds that can be recalled before their maturity date are typically known as callable bonds. These bonds allow the issuer to redeem them at a predetermined price before the maturity date, usually during a specified call period. Callable bonds often offer higher yields to compensate investors for the risk of early redemption. Other types, like putable bonds, allow investors to sell the bond back to the issuer before maturity under certain conditions.
