Business and Personal Finance Dictionary

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 

• PREREFUNDING
  
  When a corporation plans to redeem a callable bond on the first date the bond can be called, it typically issues a second bond and invests the income it receives from that sale in safe investments, such as US Treasury notes or bonds. The specific securities are chosen because their maturity dates correspond to the date on which the company will need the money to redeem the first bond. This process is called prerefunding, and the bond to be called is identified as a prerefunded bond.
  
  Back