The term arose because limit orders are kept in racks called cabinets that are located next to the bond trading floor. An infrequently traded bond or stock that is listed on an exchange. A back office area of a brokerage firm in which funds are received and disbursed. An individual calendar is issued for new stock offerings, municipal bonds, corporate bonds and government securities.
Investors hope to profit from a narrowing or widening of the spread between the options.
An option in which the holder has the right to buy a specific number of shares of the underlying security at a specified price within a specified time period. Under pre-stipulated conditions, a bond issue that may be redeemed by the issuer before its maturity date. If the issuer does call the issue, in full or part, the bondholder may receive a premium price. Issuers might call a bond when interest rates fall so drastically that it is worth the expense of issuing new bonds at the lower rates. U.S. government securities are not usually callable.