A call feature or call provision is part of the agreement a bond issuer makes with a buyer, detailing the schedule and price of redemptions before maturity. Most corporate and municipal bonds have ten-year call features, while government securities usually do not.
In financial terms, a call premium is either the amount paid by the buyer of a call option above the stock's or index’s current market price, or the additional amount over par that an issuer of bonds or preferred stock pays to redeem the security early.
The call price is the price at which a bond or a preferred stock with a call feature can be redeemed by the issuer prior to its maturity date. It is also known as the redemption price.
A callable security can be redeemed by the issuer before its scheduled maturity date, usually triggering a necessity for extra payment to the holder, identified as a call premium.
The redemption premium, also known as a call premium, is the amount over the par value that a bond issuer must pay an investor if the security is redeemed early.
