A callable bond allows the issuer to retire the security prior to maturity.

Name: A callable bond allows the issuer to retire the security prior to maturity.
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A callable bond gives the issuer the right to redeem the bond before its scheduled maturity date. This may occur if interest rates decrease, allowing the issuer to refinance the debt at a lower rate. However, a callable bond may also have a penalty or "call premium" that the issuer must pay the bondholder if they decide to call the bond early.

A Callable Bond Allows the Issuer to Retire the Security