Call risk

The risk to a lender/investor from the potential calling - for early redemption - of a callable bond.

It gives the investor the problem of re-investing their money which has been returned earlier than expected.

So if interest rates have fallen the investor will receive a lower than expected return, for the unexpired term of the original (callable) bond.

See also

• 101 call protection
• Call
• Call protection
• Callable bond
• Hard call protection
• Make whole clause
• Soft call protection
• Spens clause