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What is redemption ?

What the terminology "REDEMPTION"

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Question added by Yusuf Dalal , General Accountant. , Gmamco Contracting LLC
Date Posted: 2014/03/27
Fuzail Zubaid Ahmad MBA CPA CMA
by Fuzail Zubaid Ahmad MBA CPA CMA , Vice President Finance , Nesaj Real Estate Development Company

Redemption is paying off the principal to the bond holders, which usually happens at maturity.  However, mortgage backed bonds MBB's often redeem a part of the principal with each coupon payment provided it is a pass through bond.  

Aziz ur Rehman ur Rehman
by Aziz ur Rehman ur Rehman , Assistant Manager Finance , Central Power Puchasing Agency (CPPA)

It means discharge of liability on account of debentures by repayment made to the debenture holders. The various methods of redemption of debentures are as under:

1.By drawing lots; 2.By payment in lump sum; 3.By converting existing debentures into new shares/debentures; 4.By purchase in the open market

Atif Shahbaz
by Atif Shahbaz , Finance Manager , AXA Insurance Gulf

Redemption literally means 'recovery' or 'reclamation'. In Accounting the term of redemption is used to convey that a particular bond or loan has been fully paid.

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