Designates a clause (Provision) in a fixed-rate funding arrangement whereby a borrower/issuer can repay ahead of the initially scheduled Maturity date all or part of the loan/Bond, but must pay a certain amount to compensate the opportunity loss to be suffered by the lender/investor (loss from having to reinvest the funds received at a lower Interest rate than those of the fixed-rate loan/Bond).

(See Chapter 22 Shares of the Vernimmen)

To know more about it, look at what we have already written on this subject