Non-callable versus non-refundable bonds, Financial Management

Assignment Help:

A bond is said to be currently callable if the issue is not protected against early call provision. But most new bond issues, even if currently callable, usually have some restrictions against certain types of early redemption. The most common restriction is that of prohibiting the refunding of the bonds for a certain number of years or for the issue's life. Bonds that are non-callable for the issue's life are more common than bonds which are non-refundable for life but otherwise callable.

Call protection is much more robust than refunding protection. While there may be certain exceptions to absolute or complete call protection in some cases, call protection still provides greater assurance against premature and unwanted redemption than refunding protection. Refunding protection merely prevents redemption from certain sources, namely the proceeds of other debt issues sold at a lower cost. The holder is protected only if interest rates decline and the borrower can obtain low-cost money to pay off the debt.


Related Discussions:- Non-callable versus non-refundable bonds

What are the functions of financial management, Functions of Financial Mana...

Functions of Financial Management Traditional function of financial management has been limiting the role of finance toraising and administrating of funds required by the compa

London interbank offered rate (libor), London Interbank Offered Rate (LIBOR...

London Interbank Offered Rate (LIBOR) This is the base lending rate which is charged by banks in the London Eurocurrency market. LIBOR is the European equivalent of the U.S. pr

Calculate the economic order quantity, Q. Calculate the Economic Order Quan...

Q. Calculate the Economic Order Quantity? Calculate the Economic Order Quantity from the following details: Annual Inventory Requirements = 4, 00,000 units Cost of placin

Currency, You have the following limited information upon which to base you...

You have the following limited information upon which to base your decision as to which is the better of two alternative funding arrangements: ? Alternative 1 is to arrange funding

Accrual bond, It is a bond that does not give periodic interest payments. I...

It is a bond that does not give periodic interest payments. In spite of that, interest is added to the principal balance of the bond and is either paid at maturity or, at some poin

What are the limitations of trade payable day''s ratio, What are the Limita...

What are the Limitations oftrade payable day's ratio? Year-end trade payables may not be representative of the year. Credit purchases are VAT exclusive in the income sta

Expalin the term company objectives, Expalin the term Company Objectives ...

Expalin the term Company Objectives Financial management is anxious with making decisions about the provision and use of a firm's finances. A rational method to decision-making

Why depreciation play in estimating incremental cash flows, What role does ...

What role does depreciation play in estimating incremental cash flows? Depreciation expense is a tax deductible expense and thus affects cash flow through its effect on taxes.

Need for working capital, Along with the fixed capital nearly every Small-S...

Along with the fixed capital nearly every Small-Scale industries requires working capital though the extent of working capital requirement differs in different businesses. Working

Securities exchange act, Securities Exchange Act of 1934 With this Act,...

Securities Exchange Act of 1934 With this Act, the Congress created the Securities and Exchange Commission. The Act empowers the SEC with broad authority over all aspects of th

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd