call premium definition

call premium

Amount above the par value of a bond that its issuer must pay to the holders if the bond is redeemed before its maturity date. Call premium usually declines with the years of the bond's issue date; it is higher for bonds called after 5 years than for those called after 10 years. It compensates the bond holder for disruption in interest earnings, and for the effort to reinvest funds.

call premium is in the Accounting & Auditing, Investing and Securities & Futures Trading subjects.

call premium appears in the definitions of the following terms: callable bond, call and call price

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