Callable Bonds special feature

Accounting
Tutor: None Selected Time limit: 1 Day

Explain the special feature that makes callable bonds attractive to an issuing corporation. Why would some bonds be classified as “secured bonds”?

Dec 10th, 2014

Special feature of a callable bond

A callable bond gives the borrower (issuer) the right to pay back the obligation to the lender (bondholder) before the stated maturity date.The company's perspective is having the ability to call the bonds adds value because the company is given the flexibility to adjust its financing costs downward if interest rates decline.

Secured bonds

Bond backed by collateral, such as a mortgage or lien, the title to which would be transferred to the bondholders in the event of default.

Dec 10th, 2014

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Dec 10th, 2014
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