What is call protection on a bond?

Call protection. This is the amount of time before a bond can first be called. Call protection can vary considerably, with some bonds able to be called immediately after issuance, while other bonds might not be callable for many years. Most callable bonds tend have at least three months of call protection when they are issued, however.

What is a callable bond?

Callable bonds make up a large share of the bond market—and introduce one more variable into the bond-investing process. Callable bonds are a type of bond that can be redeemed by the issuer before the stated maturity date. There are different types of callable bonds, and different reasons why a bond might be "called" early by the issuer.

Are callable bonds a good investment?

Callable bonds face reinvestment risk, which is the risk that investors will have to reinvest at lower interest rates if the bonds are called away. Callable bonds are a good investment when interest rates remain unchanged. Callable bonds have two potential life spans, one ending at the original maturity date and the other at the call date .