What is a call provision?
Publish date: 2022-10-29
A call provision is a stipulation on the contract for a bond—or other fixed-income instruments—that allows the issuer to repurchase and retire the debt security. Also, some debt securities have a freely-callable provision. This option allows them to be called at any time.Simply so, what is a make whole call provision?
A make-whole call provision is a call provision attached to a bond, whereby the borrower must make a payment to the lender in an amount equal to the net present value of the coupon payments that the lender will forgo if the borrower pays the bonds off early.
Likewise, what is a Call privilege? call privilege. In securities trading, stipulation in a bond indenture that gives its issuer the right to redeem the outstanding bonds at a certain price, on one or more specified call dates.
Keeping this in consideration, what is a call provision quizlet?
call provision. an agreement giving the corporation the option to repurchase the bond at a specific price prior to maturity. allows the company to repurchase part or all of the bond at stated prices over a specified period.
What are call provisions and sinking fund provisions?
A call provision gives the issuing corporation the right to call the bonds for redemption. The call provision generally states that the company must pay the bondholders an amount greater than the par value if they are called. The sinking fund provision facilitates the orderly retirement of the bond issue.
What is a clean up call?
cleanup call. The action of a debt instrument (e.g. bond) issuer requiring early redemption of the instrument before it is fully amortized. This normally occurs when the principal outstanding is less than 10% of the original debt issued. The call is often made to reduce administrative costs. Also called cleanup buybackWhat is a soft call?
What Is Soft Call Provision? A soft call provision is a feature added to fixed-income securities, which becomes effective after the hard call protection has lapsed, that stipulates a premium be paid by the issuer if early redemption occurs.What does a call provision call feature allow bond issuers to do and why would they do it?
A call provision allows issuers to “call” the bonds back and repay the principal before the maturity date. Issuers would want to do this if they ever needed the bond prior to the maturity date. In addition to the bond principal, a call premium is also paid.What is full call?
A full call means that it is paying off the bond in its entirety, and all of the people who own shares of the bond will receive their principal back.What is a make whole amount?
Make-Whole Amount means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero.Are investors really made whole with a make whole call provision?
The bonds issued by corporate are usually callable. In case of a “make-whole” call, bondholders receive approximately what the bonds are worth if they are called. The provision is so called because bondholders do not suffer a loss in the event of such a call.What does YTM mean?
Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures. Yield to maturity is considered a long-term bond yield but is expressed as an annual rate.What is a make whole premium?
A “make-whole” premium is generally a present-value calculation that discounts the payments that would have been received if the debt is not prepaid, calculated based on comparable treasury yields.What is the difference between a general obligation bond and a revenue bond?
Revenue bonds, which are also called municipal revenue bonds, differ from general obligation bonds (GO bonds) that can be repaid through a variety of tax sources. While a revenue bond is backed by a specific revenue stream, holders of GO bonds are relying on the full faith and credit of the issuing municipality.What is a sinking fund do investors like bonds that contain this feature Why?
do investors like bonds that contain this feature? a sinking fund contains funds set aside by the issuer of the bond to pay for the redemption of the bond when it matures. because a sinking fund increases the likelihood that a firm will have the funds to pay off the bonds as required, investors like the feature.When you refer to a bond's coupon you are referring to?
Keyboard Shortcuts for using Flashcards:| When you refer to a bond's coupon, you are referring to which one of the following? | Annual interest payment |
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| What is the principal amount of a bond that is repaid at the end of the loan term called? | Face value |
What is the principal amount of a bond that is repaid?
The principal amount of a bond that is repaid at the end of the loan term is called the bond's: A. yield to maturity.What basic principle of finance can be applied to the valuation of an investment asset?
The 'basic principle of finance' is that the 'value of any investment' is the 'present value of all future cash' net flows as generated by the 'investment'. Explanation: It is basically dependent on the different cash flows in the industry which need to be taken into consideration before evaluating the assets.What are examples of privileges?
Privilege, as understood and described by researchers, is a function of multiple variables of varying importance, such as race, age, gender, sexual orientation, gender identity, citizenship, religion, physical ability, health, level of education, and others.What is the difference between privilege and right?
A privilege is a certain entitlement to immunity granted by the state or another authority to a restricted group, either by birth or on a conditional basis. By contrast, a right is an inherent, irrevocable entitlement held by all citizens or all human beings from the moment of birth.What do u mean by provision?
Definition: A provision is an amount set aside for the probable, but uncertain, economic obligations of an enterprise. A provision is an amount that you put in aside in your accounts to cover a future liability. When accounting, provisions are recognized on the balance sheet and then expensed on the income statement.How do you identify privileges?
Examples of types of identity that can afford an individual privilege include: race, gender, sexual orientation, religion, socioeconomic status, country of origin, lanuage, and/or ability.ncG1vNJzZmiemaOxorrYmqWsr5Wne6S7zGiuoZmkYra0ecBmmpqknGK9s7vVoqqip54%3D