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Finance
Callable Bond
A bond that the company can pay off early if interest rates drop.
Callable bonds usually pay a little higher interest to make up for the risk that the company might call them early. Investors hate when it happens because they lose future high-interest payments.It's like a loan where the bank can say 'pay me back now' if they find a cheaper way to lend money to someone else.
Real world: A company issues a callable bond at 6%. Three years later rates fall to 3%, so they call the bond and re-issue cheaper debt.
💡 Callable bonds can be great for companies but risky for investors — always check if a bond is callable before buying.