If so is a premium paid like in other bonds??
2006-07-05 07:13:16 · 5 answers · asked by Anonymous in Business & Finance ➔ Investing
Yes, if they have either extraordinary redemption provisions or call features built in, they can be called.
Can they be called at a premium? Yes they can. Just like coupon bonds that have premium calls at 101, 102, 103 etc (refers to 101%, 102%, 103%, etc) zeros can be called also. They would be called at 101% of accreted value or 102% of accreted, or 103% of accreted, etc.
***PS- answer monkey is wrong. Thats like saying "coupon bonds generally can't be called". It is false. Some bond issues have call structures built in, some don't. It is whatever the issuer, the local laws, and the bond counsel recommends.
2006-07-05 07:18:53 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Any bond can be called if it has a call provision in its covenant. For zero coupon bonds, there are one of two avenues.
The first is to have a call schedule that lays out prices and dates. These prices will always be at discount. They would never pay it off for more than par -- because they would be better off saving the cash and paying it off at maturity. What they can do is set the price so it gives a better yield than the promised yield. For example, if it was originally sold as a 20 year zero with a yield of 5%, they might have a call price after five years that would give a yield of 5.2%.
The second way that zeros become callable is seen more with High Yield bonds than with Munis. These may look like 30 year bonds, but pay no interest for the first ten years. At year ten, they start paying a coupon -- but become callable. These often have a call price above par for a few years.
2006-07-05 09:52:06 · answer #2 · answered by Ranto 7 · 0⤊ 0⤋
Generally no. Part of the deal is that they have a maturity date that's set. Therefore it's a contract between you and bond issuer that the bond will be redeemed at maturity date only.
2006-07-05 07:17:08 · answer #3 · answered by Anonymous · 0⤊ 0⤋
until eventually you've a substantial ($1m+) volume to make investments, you're likely extra acceptable off making an investment in a muni bond fund (if there is one on your state). there is an limitless type of diverse munis topics. they're puzzling to analyze. many do not commerce in a large number of situations, so that you face an excellent bid/furnish spread.
2016-11-05 22:36:33 · answer #4 · answered by ? 4 · 0⤊ 0⤋
yes
2006-07-05 08:00:50 · answer #5 · answered by mjzvik 3 · 0⤊ 0⤋