A callable bond may be redeemed by its issuer before it reaches maturity. Bonds are essentially loans from investors to companies or governments that must be paid back with interest. The issuer of ...

Brian Beers is a digital editor, writer, Emmy-nominated producer, and content expert with 15+ years of experience writing about corporate finance & accounting, fundamental analysis, and investing.

Callable bonds allow issuers to pay back the bond before maturity, often due to falling interest rates. Investors face call risk with callable bonds, which may result in losing expected interest ...

Callable bonds are a type of bond that the issuer can “call” or redeem before the maturity date. The specifics vary from bond to bond, but callable bonds always have one thing in common ...

Normally, a bond is a very simple investment instrument. It pays interest until expiration and has a single, fixed life span. It is predictable, plain, and safe. On the other hand, the callable ...

Simply put, a 5% non-callable bond would be worth a lot more than one that is callable at par in year 10. We will explore how much more — the difference is the hidden cost of the call option.

Calculate bond yield by dividing annual interest payment by current price. If bond is callable, consider potential early redemption by issuer. Use yield calculation to assess return against other ...

Investing in a non-callable bond or certificate of deposit [CD] can return as much as 100 basis points less than a callable five-year CD. However, if called, an investor may lose the opportunity ...

“You might have a bond with 10 years to maturity, but it’s callable in five years,” says Duane McAllister, senior portfolio manager at Baird Funds. Calling in a bond early can be a good ...

He also favors callable bonds that he believes are mispriced (also a specialty of recently acquired Gurtin Municipal Bond Management), which has constituted 85%-90% of the portfolio. That said ...

A few tips for bond ladders If you buy a bond that's callable, the issuer (i.e. the government or a corporation) can call the bond and redeem it before it reaches the maturity date. You don't want ...

Those familiar with CD and bond investments may already have a good grasp of the callable feature and how it might fit into their portfolio. If you have experience with callable bonds, you might ...