DEFINITION of 'Multi-Callable Bond'

A bond that allows the issuer to call or redeem it on particular future dates that are specified at the time of issuance. Since the issuer benefits by gaining flexibility with regard to the bond's maturity, the coupon on the bond may be higher than the prevailing market interest rate.

BREAKING DOWN 'Multi-Callable Bond'

Multi-callable bonds or notes are generally of two types - step-up notes or accrual notes. In multi-callable step-up notes, the coupon increases if the notes are not called by the issuer, while in accrual notes, the interest rate remains unchanged and accrues at a constant rate.

RELATED TERMS
  1. Bond

    A bond is a fixed income investment in which an investor loans ...
  2. American Callable Bond

    A bond that can be redeemed by the issuer at any time prior to ...
  3. Coupon Rate

    The yield paid by a fixed income security. A fixed income security's ...
  4. Callable Bond

    A callable bond is a bond that can be redeemed by the issuer ...
  5. Call Privilege

    The provision in a bond indenture that gives the bond issuer ...
  6. Mandatory Redemption Schedule

    Specified dates when a bond issuer is required to redeem all ...
Related Articles
  1. Investing

    How To Evaluate Bond Performance

    Learn about how investors should evaluate bond performance. See how the maturity of a bond can impact its exposure to interest rate risk.
  2. Financial Advisor

    Advising FAs: Explaining Bonds to a Client

    Most of us have borrowed money at some point in our lives, and just as people need money, so do companies and governments. Companies need funds to expand into new markets, while governments need ...
  3. Investing

    Simple Math for Fixed-Coupon Corporate Bonds

    A guide to help to understand the simple math behind fixed-coupon corporate bonds.
  4. Investing

    How Does A Bond’s Coupon Interest Rate Affect Its Price?

    All bonds come with a coupon interest rate, which is the fixed annual interest a bond pays.
  5. Investing

    What is a Premium Bond?

    A premium bond is one that trades above its face or nominal amount.
RELATED FAQS
  1. Why do bond coupon rates vary so greatly?

    Learn about the two major reasons that cause bond coupon rates to vary so dramatically and what role coupons play in the ... Read Answer >>
  2. How does a bond's coupon interest rate affect its price?

    Find out why the difference between the coupon interest rate on a bond and prevailing market interest rates has a large impact ... Read Answer >>
  3. Why doesn't the price of a callable bond exceed its call price when interest rates ...

    A callable bond provides the issuer (borrowing entity) with an option to redeem the bond before its original maturity date. ... Read Answer >>
  4. Why is my bond worth less than face value?

    Find out how bonds can be issued or traded for less than their listed face values, and learn what causes bond prices to fluctuate ... Read Answer >>
Hot Definitions
  1. Return On Equity - ROE

    The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability ...
  2. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  3. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an insurance and an investment component. The insurance component ...
  4. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  5. Capital Asset Pricing Model - CAPM

    A model that describes the relationship between risk and expected return and that is used in the pricing of risky securities. ...
  6. Internal Rate Of Return - IRR

    A metric used in capital budgeting measuring the profitability of potential investments.
Trading Center