noncallable bond
Học thuậtThân thiện
Definition
Noun: A noncallable bond is a type of debt security that includes a specific provision preventing the issuer from redeeming (or "calling") the bond before its specified maturity date. This guarantees the bondholder will receive interest payments for the entire life of the bond.
Usage
This term is used in finance and investment contexts to describe a bond's features and the rights it grants to the investor. It contrasts with a "callable bond." - The noncallable bond provides investors with more certainty regarding their income stream. - When interest rates fall, issuers cannot refinance their noncallable bonds to lower their costs.
Examples
Advanced Usage
- "Noncallable" as a feature: The adjective "noncallable" can describe other securities, but in the specific phrase "noncallable bond," it functions as a compound noun defining the security type.
- Yield comparison: Noncallable bonds often trade at a slightly lower yield than otherwise identical callable bonds, as investors pay a premium for the certainty.
Variants and Related Words
- Callable bond (n): The opposite type of bond, which be redeemed by the issuer before maturity.
- Non-refundable bond (n): A related but distinct type; it cannot be refinanced with debt bearing a lower coupon rate, but may have other call features.
- Noncallable (adj): The adjective form used to describe the bond's feature (e.g., "The bond is noncallable for ten years.").
Synonyms
- Non-redeemable bond: A less common synonym emphasizing the holder's right to keep the bond until maturity.
Antonyms
- Callable bond: A bond that the issuer has the right to redeem before its maturity date.
Noun
- a bond containing a provision that the holder cannot redeem the security before a specific date (usually at maturity)