Calls
If a company, agency, or the government
calls
the bonds you own, it redeems your investment and pays back your principal. Issuers may call bonds if the interest rates drop and they have enough money on hand to pay back outstanding debt. By calling the bonds, they eliminate the expense of making further fixed-interest payments for the duration of the bond term, and can issue new bonds at a lower rate and save money.
If your bond is called, you receive no more interest payments from the investment, forcing you to find another place to invest the money earlier than you anticipated. And if the company called your bonds due to an interest rate drop, you will find yourself reinvesting the money at a lower, less attractive interest rate. |
