2.4.14.1. Callable Bonds
With callable bonds, the issuer has the option to redeem the bonds prior to the stated maturity date.
To compensate investors for the increased risk and to mitigate possible losses, callable bonds come with higher yields than non-callable bonds. Some callable bonds provide a call premium to lessen the risk of a call. When a call price is set at a higher value than the face value of the bond, the difference is the call premium. For instance, a $1,000 bond with a call price of $1,100 has a $100 call premium payable to the investor if the bond is called. Call provisions sometimes require an issuer to pay such a premium for
