Charles P. Jones, Investments: Analysis and Management, 12 Edition, John Wiley & Sons
Charles P. Jones, Investments: Analysis and Management, 12 Edition, John Wiley & Sons
Charles P. Jones, Investments: Analysis and Management, 12 Edition, John Wiley & Sons
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Callable Bonds
Provision gives the issuer the right to call in,
(i.e., buy back) the bonds from investors
This option is attractive to issuers when
market interest rates drop sufficiently below
coupon rate
Issuer can save money by replacing higher interestcost bonds with new, lower interest-cost bonds
Wise investor note the bond issues provisions re:
call
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Municipal securities
Two basic types: General Obligation and Revenue
Generally exempt from federal taxes
Corporate bonds
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Speculative securities
Rated BB, B, CCC, CC
Significant uncertainties
Junk bonds
Rated BB or lower
High-risk, high-yield bonds
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