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Definition of '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.
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Investopedia explains 'Call Privilege'
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."
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Search results for 'Call Privilege'
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http://www.investopedia.com/exam-guide/series-63/foundation/usa-uniform-securities-act-part-5.asp
... certificate of deposit for a security; fractional undivided interest in oil, gas,
or other mineral rights; put, call, straddle, option, or privilege on a ...
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http://www.investopedia.com/exam-guide/series-66/regulation-of-securities/default.asp
... gas, or other mineral rights; put, call, straddle, option, or privilege on
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http://www.investopedia.com/exam-guide/finra-series-6/securities-industry-regulations/securities-act-1934.asp
... transferable share, investment contract, voting-trust certificate, certificate of
deposit for a security, any put, call, straddle, option, or privilege on any ...
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http://www.investopedia.com/exam-guide/series-65/alternative-investments/derivative-securities.asp
... of derivatives include: Options - A privilege sold by one party to another offering
the holder the right, but not the obligation, to buy (call) or sell (put) a ...
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http://www.investopedia.com/articles/optioninvestor/09/buying-options.asp
... We will say that we own a call with a strike price of $45 and the ... Importance Of Time
Value.) Extrinsic value is the extra cost paid for the privilege of owning ...
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http://www.investopedia.com/university/20_investments/14.asp
... Options are a privilege sold by one party to another that offers the buyer the right
to buy (call) or sell (put) a security at an agreed-upon price during a ...
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... Call your company to check this out before you rent a car and you can save ... airline
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http://www.investopedia.com/exam-guide/cfa-level-1/fixed-income-investments/embedded-option-importance.asp
... Options; 14.8 Institutional Investors and Financing Purchases; 14.9 Interest
Rate Risk; 14.10 Call and Prepayment Risk; 14.11 Reinvestment ...
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http://www.investopedia.com/slide-show/beginner-forex-steps
... on the currency that you have sold, but you also have the privilege of earning ... as
250:1. Remember, lower leverage means lower risk of a margin call, but also ...
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