A bond the issuer may repay before maturity
On dates set in advance the issuer can hand back the principal early. Falling rates make refinancing cheaper, so that is when the clause tends to be used. The buyer loses the stream of high coupons, and to compensate the stated rate is usually set above that of a plain bond.
A 3% ten-year bond called in year five stops paying the remaining five years of coupons.
For learning, not investment advice. Decisions are your own.
StockFit · TrueNorthLabs Inc.