Bonds that grant the issuer the right to extinguish the debt prior to maturity are referred to as which type of bond?

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Callable bonds are those which grant the issuer the option to redeem the bonds before their maturity date. This gives the issuer flexibility in managing their debt, but it also introduces reinvestment risk for bondholders who may have to find new investment opportunities if their bonds are called. Put bonds, on the other hand, grant the investor the right to sell the bond back to the issuer prior to its maturity. The other options (debentures, subordinated bonds, and covenant bonds) do not necessarily have callable features.

Bonds That Grant the Issuer the Right to Extinguish the Debt