This preview shows page 1. Sign up to view the full content.
Unformatted text preview: with many years left until maturity may still be new enough to be under call protection. And your bonds nearer maturity won't be called because the costs of calling the issue wouldn't be worth it for the company. While only some bonds are at risk of being called, your overall portfolio remains stable. Finally, to determine whether a callable bond actually offers you a higher yield, always compare it to the 40
yields of similar bonds that not callable. Characteristics of Bond Bond IndentureA legal and binding contract between a bond issuer and the bondholders. The indenture contains all the terms and conditions applicable to the bond issue. The indenture specifies all the important features of a bond, such as its maturity date, timing of interest payments, method of interest calculation, callable/convertible features if applicable and so on. A trustee usually a bank is assigned to represent the bond holders and to guarantee that terms of the indenture are carried out.
View Full Document