Business and Personal Finance Dictionary

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• REDEMPTION
  
  When a fixed-income investment matures, and you get your investment amount back, the repayment is known as redemption. Bonds are usually redeemed at par, or face value (traditionally $1,000 per bond). However, if a bond issuer calls the bond, or pays it off before maturity, you may be paid a premium, or a certain dollar amount over par, to compensate you for lost interest. You can redeem, or liquidate, mutual fund shares at any time. The fund buys them back at their net asset value (NAV), which is the dollar value of one share in the fund. In order to discourage quick shifting of assets among mutual funds, many funds charge a redemption fee if you take your money out of the fund within a limited period after you invest.
  
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