Definitions for "callable bond"
A bond which the issuer has the right to redeem prior to its maturity date,...
A bond that the issuing company has the right to buy back at a pre-specified price.
A bond which the issuer can decide to redeem before its stated maturity date. A call date and a call price are always given. You face a risk with a callable bond that it will be redeemed if its stated coupon is higher than prevailing rates at the time of its call date. If that happens, you won't be able to reinvest your capital in a comparable bond at as high a yield. You also face the risk that the price at which the bond is redeemed at is below the current market price.