Other Bond Redemption Types

One of these other types is called the sinking fund, or sinker.

Here, a number of the bonds in the issue get redeemed each year, and these are chosen by the serial numbers of the bonds being picked by some pricess or other - and those who hold those bonds send them in and get the money back.

The last repayment of all will tend to be larger as the bondholders have held the bonds the largest time and this is called the balloon repayment.

These don't tend to be seen that often these days.

There is also a purchase fund whereby the bonds are bought on a secondary market.

Serial notes are ones where some of the capital gets repaid each year as well as the interest.

Finally some bonds have optional redemption which may get granted to either party in the bond transaction deal.

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