Call Premium

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DEFINITION of 'Call Premium'

1. The dollar amount over the par value of a callable fixed-income debt security that is given to holders when the security is called by the issuer.

2. The amount the purchaser of a call option must pay to the writer.

INVESTOPEDIA EXPLAINS 'Call Premium'

1. The call premium is somewhat of a penalty paid by the issuer to the bondholders for the early redemption.

2. In order to receive the rights associated with a call option, the premium must be paid to the seller.

RELATED TERMS
  1. Indenture

    A legal and binding contract between a bond issuer and the bondholders.
  2. Call Privilege

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  3. Conversion

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  5. Extraordinary Redemption

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RELATED FAQS
  1. How are call options priced?

    A call option provides an investor the right to purchase a stock, bond or other underlying security at a specific purchase ... Read Full Answer >>
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