Non-callable versus non-refundable bonds, Financial Management

Assignment Help:

A bond is said to be currently callable if the issue is not protected against early call provision. But most new bond issues, even if currently callable, usually have some restrictions against certain types of early redemption. The most common restriction is that of prohibiting the refunding of the bonds for a certain number of years or for the issue's life. Bonds that are non-callable for the issue's life are more common than bonds which are non-refundable for life but otherwise callable.

Call protection is much more robust than refunding protection. While there may be certain exceptions to absolute or complete call protection in some cases, call protection still provides greater assurance against premature and unwanted redemption than refunding protection. Refunding protection merely prevents redemption from certain sources, namely the proceeds of other debt issues sold at a lower cost. The holder is protected only if interest rates decline and the borrower can obtain low-cost money to pay off the debt.


Related Discussions:- Non-callable versus non-refundable bonds

Explain the effect of foreigners’ portfolio investments, As the early 1980s...

As the early 1980s, foreign portfolio investors have purchased an important portion of U.S. treasury bond issues. Discuss the short-term and long-term influences of foreigners’ por

Market capitalization, Market Capitalization : Often referred to as marke...

Market Capitalization : Often referred to as market cap, it refers to the value of a company, that is, the market worth of its outstanding shares. A common misconception is that

What is a financial ratio, What is a financial ratio? A financial rati...

What is a financial ratio? A financial ratio is a number that convey the value of one financial variable relative to another.  Put more easily, a financial ratio is the final

Define financial management, Financial management is that division of manag...

Financial management is that division of managerial process which is concerned with the planning and controlling of firm's financial resources. It is concerned with the procurement

TRIAL BALANCE, #The following items are found in the The following items ar...

#The following items are found in the The following items are found in the trial balance of M/s Sharada Enterprise on 31st December, 2000.

Investment appraisal , what are the limitations of using projected data

what are the limitations of using projected data

Provide three examples of mutually exclusive projects, Provide three exampl...

Provide three examples of mutually exclusive projects. Mutually elite projects are projects that compete against each other for our selection.  If a firm were considering the b

Define decision rule for accepting or rejecting projects, What is the decis...

What is the decision rule for accepting or rejecting proposed projects while using net present value? While using the net present value decision rule any project along with a net

What is online futures trading, Question 1: (a) Briefly explain the Ele...

Question 1: (a) Briefly explain the Electronic Data Interchange (EDI), and list the benefits of EDI. (b) List and describe the main components of MACSS. (c) Explain brief

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd