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Callable Bonds: Better Value Than Advertised?


  • Andrew Kalotay


Callable bonds allow issuers to manage interest rate risk in the sense that if rates decline, the bonds can be redeemed and replaced with lower-cost debt. Investors demand a coupon premium for giving issuers this option; and when deciding whether to issue callable or noncall-able bonds, the issuing companies must determine whether it's worth paying the coupon premium. Copyright (c) 2008 Morgan Stanley.

Suggested Citation

  • Andrew Kalotay, 2008. "Callable Bonds: Better Value Than Advertised?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 20(3), pages 91-99.
  • Handle: RePEc:bla:jacrfn:v:20:y:2008:i:3:p:91-99

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    References listed on IDEAS

    1. Marco Pagano & Ailsa A. Röell & Josef Zechner, 2002. "The Geography of Equity Listing: Why Do Companies List Abroad?," Journal of Finance, American Finance Association, vol. 57(6), pages 2651-2694, December.
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    5. Craig Doidge & G. Andrew Karolyi & Rene M. Stulz, 2007. "Has New York Become Less Competitive in Global Markets? Evaluating Foreign Listing Choices Over Time," NBER Working Papers 13079, National Bureau of Economic Research, Inc.
    6. Chemmanur, Thomas J. & Fulghieri, Paolo, 2006. "Competition and cooperation among exchanges: A theory of cross-listing and endogenous listing standards," Journal of Financial Economics, Elsevier, vol. 82(2), pages 455-489, November.
    7. Alexander, Gordon J. & Eun, Cheol S. & Janakiramanan, S., 1988. "International Listings and Stock Returns: Some Empirical Evidence," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 23(02), pages 135-151, June.
    8. Chemmanur, Thomas J & Fulghieri, Paolo, 1999. "A Theory of the Going-Public Decision," Review of Financial Studies, Society for Financial Studies, vol. 12(2), pages 249-279.
    9. Jayaraman, Narayanan & Shastri, Kuldeep & Tandon, Kishore, 1993. "The impact of international cross listings on risk and return : The evidence from American depository receipts," Journal of Banking & Finance, Elsevier, vol. 17(1), pages 91-103, February.
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