CALL PREMIUM
Financial Dictionary — Bonds & Fixed Income
Definition
CALL PREMIUM is a premium in price above the par value of a bond or share of preferred stock that must be paid to holders to redeem the bond or share of preferred stock before its scheduled maturity date.
Detailed Explanation
Callable bonds give the issuer the right to redeem the bond before maturity at a predetermined price, usually when interest rates decline.
Common Uses
- Used to explain the concept in accounting and business contexts.
- Used when training staff or documenting procedures and policies.
- Used when training staff or documenting procedures and policies.
Practical Example
- Example: Teams reference **CALL PREMIUM** when defining terms in manuals, policies, or training materials.
Why This Term Matters
- Why it matters: Improves clarity and consistency across documentation and decision-making.