Call Price

What is Call Price..?

Call Price, also known as redemption price, is the price at which the issuer of a call option can redeem the agreed upon commodity or financial instrument (a bond or a preferred stock) before the maturity or expiration date. This price is already decided upon at the time of issuing the call option and is usually higher than the face value of the commodity or financial instrument but its price lowers as it draws nearer to the maturity or expiration date.

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At the time of issue of the call options, provisions are set which will allow the issuer to redeem the commodity or financial instrument before the maturity or expiration date, and the call price is also set. Having such a provision allows the seller the flexibility to adjust its financing costs, provided the company takes into account the call price when determining whether or not it is worth it for them to redeem its call option.

Edited and Updated 30th January 2014

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