Partial Redemption
What it is:
A partial redemption occurs when an investor withdraws some of a security's value.
How it works (Example):
Let's say John Doe owns $200,000 of Treasury securities. He decides he's having a mid-life crisis and wants to buy a red sportscar. To get the money, he partially redeems his Treasury investment by withdrawing $75,000 of Treasury notes in his portfolio account.
Why it Matters:
A partial redemption is a partial liquidation of an account. They may occur in order to lock in profits, pay liabilities, or divert assets to another investment.
