Call Premium


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.

BREAKING DOWN '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.

  1. Indenture

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

    The provision in a bond indenture that gives the bond issuer ...
  3. Conversion

    The exchange of a convertible type of asset into another type ...
  4. Forced Conversion

    The occurrence of an issuer of a convertible security exercising ...
  5. Yield To Call

    The yield of a bond or note if you were to buy and hold the security ...
  6. Extraordinary Redemption

    A provision that gives a bond issuer the right to call its bonds ...
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