Call Loan

  

Categories: Muni Bonds, Bonds

Call loans are super short-term loans that banks give to brokers or brokerage firms. Brokers use the money to offer margins, which give investors the ability to borrow money to play the market.

Let's say you set up an account with a broker to buy $100,000 in shares and they offer a 50% margin. You pay $100,000, and the brokerage uses call loans to let you invest another $50,000. The call loan is backed up by the securities in the account, so the loan is pretty low risk (which means low interest rates). Brokers have strict rules about how much of a margin they give clients, so even if the value of your investments falls, they still have enough dough to pay off the loans and make some bucks.

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Finance: What is Forced Conversion?59 Views

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Finance allah shmoop what is forced conversion Okay this is

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forced conversion Yeah this is also forced conversion and so's

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this Yeah that is the issuer of this particular bond

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Like the company who borrowed money has the right as

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described in the indenture to force you to convert the

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bond either into and say twenty five shares of common

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stock or something else Which sort of implies that a

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forty bucks a share takes you get that thousand dollars

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bucks a share or the issuer or company who sold

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bond and force converted into cash for the small conversion

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premium of ah two point five percent or that's twenty

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five bucks in this thousand dollars par value bond So

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in this sense essentially the break even Numbers actually 41

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dollars a share not forty there because you get an

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extra little premium bump there if they force you to

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convert the bond or debt into equity Got it We'll

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force conversion in a bond sense is usually something cos

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do when they can either refinance the bond at cheaper

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