A bond (or debt security) is redeemable at par when the holder has the right to receive its par value upon redemption or on maturity date. Bonds that are redeemable at par at the holder’s consent protect investors against a rise in interest rates. If rates increase, the price of a fixed-rate bond would decline. However, if holders have the right of turning their bonds in and receiving their par value, they are protected against rising rates. In this case, they can reinvest the proceeds at a higher rate.
November 24, 2024
