Callable Bonds: Reinvestment Risk Explained
Summary
Hollow Point Trading explains how callable bonds can repay principal when the issuer exercises its call option, potentially leaving investors to reinvest at lower rates. The example contrasts a $1,000 bond paying a 6% coupon with reinvestment at 4%, showing why call risk matters to income-focused investors.
https://youtu.be/FInRnCmrYDM
A callable bond can return cash when reinvestment gets harder #Shorts
A callable bond can return your principal just when comparable income becomes harder to find. Imagine a bond with one thousand dollars of face value pays a six percent annual coupon. That means sixty dollars of annual coupon income. Assume its terms permit a call at par and the issuer redeems it. If you reinvest that thousand dollars at four per...
