CALL PREMIUM | The World of Accounting For Professional Accountants

1. amount in excess of par value that a company must pay when it calls a security. It is the difference between the CALL PRICE and the maturity value. The issuer pays the premium to the security holder in order to acquire the outstanding security before the maturity date. The call premium is generally equal to one year's interest if the bond is called in the first year, and it declines at a constant rate each year thereafter.

2. OPTION.