Concept
Call Provision 0
A call provision is a feature in a bond agreement that allows the issuer to repurchase and retire the bond before its maturity date, typically at a premium to the face value. This provision is advantageous to issuers in declining interest rate environments, as it enables them to refinance debt at lower rates, but it poses reinvestment risk to bondholders who may have to reinvest at lower yields.
Relevant Degrees