What Is a Callable Bond? Definition & Types

What are Callable Bonds and How Do They Work?

Bonds are essentially loans from investors to corporations or governments that must be repaid with interest. The issuer of a traditional bond must make a specified number of coupon payments (interest) to the bondholder over the life of the bond, then return the bond’s face value (principal amount) to the bondholder once the bond reaches maturity.

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