Sado-monetarism and Soft call protection: Difference between pages
imported>Charles Cresswell (Redirected page to Sadomonetarism) |
imported>Doug Williamson (Layout.) |
||
| Line 1: | Line 1: | ||
A weak form of protection for lenders/investors in securities, designed to mitigate the adverse effects of call risk for investors. | |||
Soft call protection requires the payment of a premium to the investor, on any early redemption of a callable bond by the borrower/issuer. | |||
The premium is usually small - for example 0.5% or 1% of the principal per annum - over the remaining life at early redemption. | |||
At early redemption the premium becomes payable, together with principal and outstanding interest at the call/redemption date. | |||
A 1% premium is often referred to as ''101 call protection''. | |||
It sometimes applies only for an early part - for example just the first year - of the life of a security (the security becoming freely callable after that initial period of soft call protection). | |||
== See also == | |||
* [[Call risk]] | |||
* [[Hard call protection]] | |||
* [[Soft]] | |||
Revision as of 13:29, 6 May 2016
A weak form of protection for lenders/investors in securities, designed to mitigate the adverse effects of call risk for investors.
Soft call protection requires the payment of a premium to the investor, on any early redemption of a callable bond by the borrower/issuer.
The premium is usually small - for example 0.5% or 1% of the principal per annum - over the remaining life at early redemption.
At early redemption the premium becomes payable, together with principal and outstanding interest at the call/redemption date.
A 1% premium is often referred to as 101 call protection.
It sometimes applies only for an early part - for example just the first year - of the life of a security (the security becoming freely callable after that initial period of soft call protection).
