Series 52: 4.5.9. Call Risk

4.5.9.  Call Risk

Call risk is a type of reinvestment risk (see previous section) that specifically affects callable bonds. Call risk is the risk that a bond will be called when interest rates are declining. When interest rates decline, an issuer of a bond usually does not want to continue to pay interest payments at the higher rate, so the company borrows money at the lower rate and uses