Extendable Bond – Fincyclopedia
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Derivatives




Extendable Bond


A long-term debt security which has an embedded option to extend its maturity beyond the original maturity date. The bond indenture may offer either the issuing entity or the holders, or both, an option to delay principal repayment while interest payment is undisrupted. In particular, this bond works to the advantage of holders during episodes of falling interest rates.

The embedded option translates into the fact that the extendable bond usually sells at a higher price than regular bonds.



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[wd_asp elements='search' ratio='100%' id=6]Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now ...
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