What's difference between "Retire bond", "Redemption of bond", and "Call bond".

Solutions

Expert Solution

RETIRE BOND

Retire bond is a accounting term which is used for the buyback of bonds. When a company decides to repay the dept represented by the bonds ( which were previously sold to general public), the bond is called retire bond.

REDEMPTION OF BOND

When a company decides to return investor's principal amount in bond, it is called redemption of bond. The same happens after completion of a maturity period or calling the bond for redemption. The bond can be redeemed at par, at premium or at discount. (Redemption at discount is not generally followed in market.)

CALL BOND

When a company reserves the right to call bond for redemption before it's maturity, this bond is called call bond.

Normally these bonds have higher coupon rate in comparison to normal bonds.

CONCLUSION

In simple words-

Retire bond is buyback of bond.

Redemption of bond is returning of Investor's capital after maturity of bond.

Call bond is redemption of bond on issuer's call before bond's maturity.

ekkarill92 answered 1 year ago

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