Why Are Many Bonds Callable

question 115

Essay

Why are many bonds callable
What is the disadvantage to the investor of a callable bond
What does the investor receive in exchange for a bond being callable
How are bond valuation calculations affected if bonds are callable

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Definitions:

Industrialize

The process by which an economy is transformed from primarily agricultural to one based on the manufacturing of goods, involving mechanization and an increase in production capacity.

Northern Iron Works

Historic foundries in the Northern United States, significant for their role in the industrialization era.

Separate Peace

An agreement to cease hostilities and settle peace terms independently, often by one party in a wider conflict without the consensus of its allies.

Confederate Nationalism

The patriotic sentiment and cultural identity that developed among the citizens of the Confederate States of America during the American Civil War.