When you're a kid and make a trade (say, exchanging your pudding for someone else's baloney sandwich), you might call "no backsies." Once the trade is made, the other person can't change their mind. The deal is done.
A retractable bond has the opposite provision. It's a bond, but with a "backsies" stipulation built in. The holder of the bond can make the issuer redeem it at par. They can sell it back to the issuer, forcing them to pay off whatever remaining principal there is left on the debt instrument.
In technical terms, the security consists of a bond along with a put option. The put option gives the holder the option to sell it back to the issuer. Or they can hold onto it, earning more interest.
The retractable bond allows the holder to take advantage of changing interest rates. If they can get a better deal somewhere else, they can exercise the put, get their money back, and buy another bond with a higher rate.
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Finance: What is a Bail Bond?0 Views
and finance Allah shmoop What is Ah bail bond All
right people you thought that knocking off a seven eleven
11 was a lark Yes Something cool to do you
know on a warm Saturday night Well you grew up
in a normal blue collar public school neighborhood And that's
what all the cool kids did on weekends right Knocking
off a seven eleven 11 was well like a rite
of passage but uh no if you weren't good at
it you got caught during security cameras So poor you
as they checked your body in you know violating places
Will the judge mercifully let you out on bail That
is if you put up 50 grand ahead wealth the
court would let you out of jail until it's time
to then go back in front of a judge and
plead your case It wasn't me or al Qaida made
me do it or I'm broke and I really needed
a Slurpee Well the key factoid that matters here is
that you actually showed up for your hearing in front
of the judge I your trial And because you did
show up well the bail bondsman collected the 50 grand
that she put up on your behalf promising the court
system that you would in fact show up Were you
out on bail for a month while the bondsman would
take it as something like 2% of the total like
a grand or so But maybe Maur if you were
a flight risk like would Mommy and Daddy have you
escaped to Mexico to live permanently with Aunt Irma and
Uncle Ned on their meth farm Or would you have
had that weird facial surgery and end up on an
Alaskan fishing boat taking revenge on innocent Sam and the
rest of your life Yeah but no you showed up
Mommy and Daddy paid the 2% on the 50 K
or 1000 bucks for the bail bond They paid a
bunch of other fees as well including the $50 upgrade
for the Cam Amiel scented rubber gloves during your intake
So the whole adventure will have cost you a few
grand just to be out of jail for that month
and change before your trial The key takeaway from this
concept Next time you rob a seven eleven 11 don't
wear the fishnet pantyhose stockings over your face Where the
full Monty thick ones Yeah it's bail bonds
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