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noncallable bond

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Noun1.noncallable bond - a bond containing a provision that the holder cannot redeem the security before a specific date (usually at maturity)
bond certificate, bond - a certificate of debt (usually interest-bearing or discounted) that is issued by a government or corporation in order to raise money; the issuer is required to pay a fixed sum annually until maturity and then a fixed sum to repay the principal


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1 bp might seem exceedingly small, it is understandable when one considers that in a frictionless environment, calls are strictly endogenous and only occur when the credit spread for an equivalent noncallable bond narrows to less than the make-whole premium.
If this happens, you''ll only get "par value" on the buy back, though "callable" bonds offer higher interest returns than noncallable bonds.
Effect of Options on Yield Perhaps the best way to understand the impact of including a call option on a municipal bond is to look at the value of a callable bond as if it were the value of a noncallable bond minus the value of the embedded call.
 
 
 
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