Callable Common Stock

AAA

DEFINITION of 'Callable Common Stock'

A security that represents ownership in a corporation that has voting rights, whose owners are last to be paid if the company liquidates and which is redeemable by the issuing corporation, at a predetermined price or at a premium to the current market price. Typically, callable common stock is issued for a subsidiary company by its parent company. The parent company reserves the right to buy back the shares of the subsidiary company, should it become strategically beneficial.

INVESTOPEDIA EXPLAINS 'Callable Common Stock'

Common stock is usually non-callable; it must be specifically designated as callable at the time of sale, if the corporation wants to have the option to redeem it. Otherwise, common stock will remain on the market indefinitely, unless the company chooses to buy back its shares on the open market, has its shares delisted or goes bankrupt.

RELATED TERMS
  1. Subsidiary

    A company whose voting stock is more than 50% controlled by another ...
  2. Callable Bond

    A bond that can be redeemed by the issuer prior to its maturity. ...
  3. Callable Preferred Stock

    A type of preferred stock in which the issuer has the right to ...
  4. Common Stock

    A security that represents ownership in a corporation. Holders ...
  5. Parent Company

    A company that controls other companies by owning an influential ...
  6. Putable Common Stock

    Common stock that gives investors the option to put the stock ...
Related Articles
  1. What is the difference between preferred ...
    Investing

    What is the difference between preferred ...

  2. Why do some preferred stocks have a ...
    Investing

    Why do some preferred stocks have a ...

  3. A Primer On Preferred Stocks
    Bonds & Fixed Income

    A Primer On Preferred Stocks

  4. Introduction To Convertible Preferred ...
    Bonds & Fixed Income

    Introduction To Convertible Preferred ...

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center