Call risk: Difference between revisions
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imported>Doug Williamson m (Categorise.) |
imported>Doug Williamson m (Update.) |
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The risk to a lender/investor from the potential calling - for early redemption - of a callable bond. | The risk to a lender/investor from the potential calling - for early redemption - of a callable bond. | ||
It gives the investor the | |||
It gives the investor the problem of re-investing their money which has been returned earlier than expected. | |||
So if interest rates have fallen the investor will receive a lower than expected return, for the unexpired term of the original (callable) bond. | So if interest rates have fallen the investor will receive a lower than expected return, for the unexpired term of the original (callable) bond. | ||
Latest revision as of 14:36, 2 May 2018
The risk to a lender/investor from the potential calling - for early redemption - of a callable bond.
It gives the investor the problem of re-investing their money which has been returned earlier than expected.
So if interest rates have fallen the investor will receive a lower than expected return, for the unexpired term of the original (callable) bond.
