Did you know that “bond calls” may be found on any type of bond? A bond with no call attached to it is said to be “non-callable.” With a non-callable bond, the Yield-to-Maturity is the yield you will earn if you hold the bond until its maturity date.
A bond call gives the issuer the right to call your bond from you on a set date, at a set price, sometime before maturity. Once the calendar has arrived at the first call date, the bond is callable on that date and on any date thereafter, until maturity, at the issuer’s discretion. Because of this, you have to want to own a bond at its lowest possible yield, whether that’s yield-to-maturity or yield-to-call, before making the decision to buy it.