What is ‘Callable Security’
A security with an embedded call provision that allows the issuer to repurchase or redeem the security by a specified date. Since the holder of a callable security is exposed to the risk of the security being repurchased, the callable security is generally less expensive than comparable securities that do not have a call provision.
Explaining ‘Callable Security’
The conditions of the call provision are established at the time the security is issued. Callable securities are commonly found in the fixed-income markets and allow the issuer to protect itself from overpaying for debt.
Further Reading
- Callable convertible debt under managerial entrenchment – www.sciencedirect.com [PDF]
- Callable bonds: A risk‐reducing signalling mechanism – onlinelibrary.wiley.com [PDF]
- A model for designing callable bonds and its solution using tabu search – www.sciencedirect.com [PDF]
- Are negative option prices possible? The callable US Treasury-Bond puzzle – www.jstor.org [PDF]
- Evaluation of callable bonds: Finite difference methods, stability and accuracy – academic.oup.com [PDF]
- The choice between callable and noncallable bonds – onlinelibrary.wiley.com [PDF]
- Savings bonds, retractable bonds and callable bonds – www.sciencedirect.com [PDF]
- Callable bonds: A risk-reducing signalling mechanism-A reply – www.jstor.org [PDF]
- A simple approximation of the value of callable convertible preferred stock – www.jstor.org [PDF]
