CALL PRICE Meaning and
Definition
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The term "call price" refers to the specific price at which a callable security, such as a bond or a preferred stock, can be repurchased or redeemed by the issuer before its scheduled maturity date. It represents the predetermined amount that an issuer must pay to buy back the security from investors who hold it.
When a security is issued, the call price is typically stated in the terms of the investment. It is usually set at a premium, meaning it is higher than the original issue price. This is because issuers typically call the security to take advantage of declining interest rates, which allows them to issue new debt at lower interest rates. By redeeming the existing security and reissuing new debt at lower rates, the issuer can reduce its overall borrowing costs.
The call price acts as a safeguard for investors, as it guarantees them a certain amount of return if the security is called. Additionally, it allows investors to make informed decisions about whether to invest in the security, taking into consideration the potential call risk.
In practice, if an issuer decides to exercise its call option and redeem a security, it will typically notify investors in advance. At that point, investors have the choice to either sell the security back to the issuer at the call price or to hold onto it until maturity.
Overall, the call price represents the predetermined repurchase price of a callable security, giving investors an understanding of the potential eventuality of their investment being redeemed by the issuer.
Common Misspellings for CALL PRICE
- xall price
- vall price
- fall price
- dall price
- czll price
- csll price
- cwll price
- cqll price
- cakl price
- capl price
- caol price
- calk price
- calp price
- calo price
- call orice
- call lrice
- call 0rice
- call peice
- call pdice
- call pfice
Etymology of CALL PRICE
The etymology of the word "call price" can be understood by looking at the origins of its constituent terms: "call" and "price".
1. Call: In this context, the term "call" refers to a financial option that gives the holder the right (but not the obligation) to buy an underlying asset at a specified price within a predetermined period. This meaning of "call" originated from the world of options trading and can be traced back to the mid-1700s.
2. Price: The word "price" is derived from the Old French word "pris", meaning "value" or "worth". It entered the English language around the 13th century and has retained its basic meaning of the amount of money required to purchase or obtain something.
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