Callable & Convertible Bonds
Callable bonds let the ISSUER redeem early — typically when rates fall — so they pay more yield and often include call protection; convertible bonds let the HOLDER exchange the bond for a set number of common shares.
Call risk and reinvestment risk travel together: when rates drop, the issuer calls the bond and the investor must reinvest at the new lower rates. Convertible prices track the stock once conversion value exceeds bond value, giving them a hybrid character.