Final answer:
True, bonds that provide an issuer the option to repay before their maturity date are known as callable bonds, offering issuers flexibility and imposing reinvestment risk on investors. A bondholder is entitled to periodic interest payments and the return of principal, albeit with some risk.
Step-by-step explanation:
If an investor has the right to retire the bonds, they are indeed referred to as callable bonds. This is a feature of some bonds that allows the issuer the option to repay the debt before the maturity date. Callable bonds provide flexibility to the issuer but come with reinvestment risk for the investors, as they might have to invest the returned principal at a lower interest rate if the issuer decides to call the bond when the interest rates have declined.
Bonds are debt instruments through which the issuer is obliged to pay interest (coupon) and repay the principal at a specified maturity date. Companies often issue bonds to raise capital for projects without needing a bank loan. A bond's yield is essentially the rate of return it promises at the time of purchase. The value of bonds to investors is heavily influenced by interest rates, leading to bond prices adjusting accordingly to reflect the current market rate.
A bondholder is an investor who owns a bond and is entitled to receive periodic interest payments. However, if a company fails to make these interest payments or to repay the principal, bondholders have the right to take legal action, but there might be no guarantee of full recovery of their investment.