Doubling Option


DEFINITION of 'Doubling Option'

A sinking fund provision that gives a bond issuer the right to redeem twice the amount of debt when repurchasing callable bonds. A doubling option allows the issuer to retire additional bonds at the sinking fund's call price.

BREAKING DOWN 'Doubling Option'

This option will usually be exercised as current interest rates move lower than the bond's yield. The firm will be motivated to repurchase more debt through the sinking fund option and refinance itself at the lower rates.

  1. Sinking Fund

    A means of repaying funds that were borrowed through a bond issue. ...
  2. Sinking Fund Call

    A provision allowing a bond issuer the opportunity to buy outstanding ...
  3. Callable Bond

    A bond that can be redeemed by the issuer prior to its maturity. ...
  4. Corporate Bond

    A debt security issued by a corporation and sold to investors. ...
  5. Yield

    The income return on an investment. This refers to the interest ...
  6. U.S. Savings Bonds

    A U.S. government savings bond that offers a fixed rate of interest ...
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