When you buy a mortgage-backed bond, you are in effect buying a straight bond and then giving away a call option to the homeowners.
On the Greece front, there is a growing call for private bond holders to share the burden of a second bailout.
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But reasonably sophisticated investors can create the same product themselves by purchasing a risk-free zero-coupon Treasury bond and call options on a stock index, such as XSP options traded on the Chicago Board Options Exchange.
An investor in such a bond may wish to know what yield will be realized if the bond is called at a particular call date, to determine whether the prepayment risk is worthwhile.
"They can buy, sell, share or put a call virtually to any stock, bond or currency in the world, they can do it from their basement, and they can do it with information that in the past brokers would only give to their clients for a charge, " says Thomas L Friedman, of the New York Times, author of a book on globalisation.
Prepayment risk is the risk that a given bond issue will be paid off earlier than expected, normally through a call provision.
One, the yield to the worst call date is much better than yield to maturity of a non-callable bond (aka, bullet bond).
The failure of the German bond-market could be a wake-up-call to European leaders to take more drastic action to prevent the crisis.
Meredith Whitney received a lot of attention for her Armageddonesque call on the state of the municipal bond market.
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The point of the call was not, in fact, for us to bond but for her to secure a donation and a credit card number.
Skyfall, the latest James Bond film, is on course to beat Call of Duty's tally within just a couple of months of its release, the ERA said.
Yet the call for government cash in Spain comes at a time when the country is already struggling to retain the confidence of bond investors amid growing capital flight.
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