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The call price is the price at which an issuer of a security can redeem that security. The call price is set at the time of issuance. The security with a call price can be either a callable bond or a preferred stock. The call price is also called the redemption price. The call price at the time a security is redeemed usually is at a premium above the market price. A company might still be willing to pay a premium of some sort based on the spread between the market price and the call price, because it may still be advantageous for the company to do so. For example, if interest rates decline a company may decide to redeem a callable bond for the call price and issue a new bond at a lower rate. |
