Business and Personal Finance Dictionary

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• CALLABILITY
  
  The feature of a bond whereby the corporation that has issued it can redeem the bond before it matures. Corporations may call their bonds when interest rates drop below their current bond rates. They may then replace high-yielding bonds with lower-yielding bonds. Call provisions must be made clear before a bond is issued. These provisions include the call price, which is the price at which the bond will be sold back to bondholders. The call price is usually above par. The company must also include dates on which it can legally begin to order its bonds redeemed.
  
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