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Latent Call Option

An option (latent option) that gives the issuer of a convertible bond or convertible preferred stock the right to redeem it from the holder for a preset call value (exercise price) or to convert it to common stock at a specific conversion ratio. The issuer will typically choose to exercise this option once the benefits of holding its stock exceed some specific trigger level.

The opposite of a latent call option is a latent put option.

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