# Callable Bond

*Markets & Instruments — Finicade finance glossary*

A callable bond lets the issuer repay early, typically when rates have fallen and it can refinance more cheaply. You have effectively sold the issuer an option, so you're paid a higher yield in exchange for the worst kind of asymmetry: you get called away exactly when your bond has become valuable. This caps upside and creates negative convexity, which is why callable bonds are quoted on yield-to-worst rather than yield-to-maturity.

**Also known as:** call provision, redeemable bond

**Related terms:** [Bond](https://finicade.com/glossary/bond), [Option-Adjusted Spread (OAS)](https://finicade.com/glossary/option-adjusted-spread), [Convexity](https://finicade.com/glossary/convexity), [Yield to Maturity (YTM)](https://finicade.com/glossary/yield-to-maturity), [Convertible Bond](https://finicade.com/glossary/convertible-bond)

Source: https://finicade.com/glossary/callable-bond