Stock redemption
A stock redemption is an acquisition by a corporation of its shares in exchange for cash or property, for either retiring the shares or holding them as treasury stock [Thismatter.com].
Depending on the context, the term redemption has different uses in finance and business. In finance, redemption refers to the repayment of any fixed-income security at or before the asset's maturity date. Bonds are the most common type of fixed-income security, but others include certificates of deposit (CDs), Treasury notes (T-notes), and preferred shares. Another use of the term redemption is in the context of coupons and gift cards, which consumers may redeem for products and services. People who invest in fixed-income securities, such as bonds, receive fixed-interest payments regularly. Bonds can be redeemed before or on their maturity date. If redeemed at maturity, an investor receives the bond's par value (also called the face value). This refers to the original value of the bond when it was first issued and is the amount of money the bond issuer agrees to repay the bondholder. A callable bond, also known as a redeemable bond, is one that the issuer may redeem before it reaches its stated maturity date. Redemption value is the price at which the issuing company will repurchase the bond from investors before its maturity date. A callable bond allows the issuer to pay off its debt early. An issuer may call their bond if market interest rates move lower. A mutual fund is another example of an investment that an investor can redeem. To make a mutual fund redemption, the investor must inform their fund manager of their request. The manager must process the request within a certain time and distribute the funds to the investor. The amount owed to the investor is usually the current market value of their shares, less any fees and other charges. As consumers, we often make redemptions in our everyday lives. For example, a coupon or gift card is a form of redemption because the value of the coupon or card is redeemed for a good or service [Investopedia].
Redemption: Definition in Finance and Business. Investopedia. Retrieved from: https://www.investopedia.com/terms/r/redemption.asp
Stock redemption. Thismatter.com. Retrieved from: https://thismatter.com/money/tax/stock-redemptions.htm