callable bonds

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Fixed-rate bonds, usually convertibles, in which the issuer has the right, but not the obligation, to redeem (call) the bond at par during the life of the bond. The call exercise price may be at par, although it is usually set at a premium. A grace period during which the borrower is unable to call the bond will usually be included in the terms of the agreement; conversion after the grace period will only be possible if certain conditions are met, usually related to the price of the underlying share.

Subjects: Financial Institutions and Services — Accounting.

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