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Call provision |
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Call provisionAn embedded option granting a bond issuer the right to buy back all or part of an issue prior to maturity.Call provisionA provision of a bond or preferred stock issue, listed in its indenture (the formal agreement between the bond issuer and the holder) that allows the issuer to redeem the bond before the maturity date either at par or at a premium to par.Similar MatchesFair price provisionFair price provisionSee:Appraisal rights Porcupine provisionPorcupine provisionOften used in risk arbitrage. See: Shark repellent. Make whole provisionMake whole provisionRelated to the lump-sum payments made when a loan or bond is called, equal to the NPV of future loan or coupon payments not paid because of the call. The payment can be significant and negate the attractiveness of a call. Put provisionPut provisionGives the holder of a floating-rate bond the right to redeem the note at par on the coupon payment date. Provisional call featureProvisional call featureA stipulation in a convertible issue that allows the issuer to call the issue during the noncall period if the price of the stock reaches a certain level. In the case of convertible securities, right of an issuer to accelerate the first redemption date if the underlying common should trade at or above a certain level for a sustained period. Most typical terms are 150% of conversion price for 20 consecutive days. Note that under these circumstances the security has appreciated, at a minimum, 50% since being issued. |
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