Nazim wants to Include Bonds in his Investment Portfolio, But He Wants the Option to Sell the Bond to the Issuer at a Specified Price on a Certain Date Before the Maturity of the Bond. Which of the Following Bond Redemption Features Should He Pick? Answer Revealed
by Niranjani
Updated Oct 20, 2023
Nazim wants to Include Bonds in his Investment Portfolio, But He Wants the Option to Sell the Bond to the Issuer at a Specified Price on a Certain Date Before the Maturity of the Bond. Which of the Following Bond Redemption Features Should He Pick?
A. Putable bond
B. Warrants
C. Convertible bond
The correct answer is Putable bond
A putable bond is a special type of bond. If you own this bond, you have the choice (but you don't have to) to make the company that issued the bond give you your money back before the bond's due date. In simple terms, it's a bond that comes with an option for the investor to cash out early if they want. This is different from callable bonds, where the company can choose to pay back the bond early.
Nazim wants to Include Bonds in his Investment Portfolio, But He Wants the Option to Sell the Bond to the Issuer at a Specified Price on a Certain Date Before the Maturity of the Bond. Which of the Following Bond Redemption Features Should He Pick - FAQ
A putable bond is a special type of bond. If you own this bond, you have the choice (but you don't have to) to make the company that issued the bond give you your money back before the bond's due date. In simple terms, it's a bond that comes with an option for the investor to cash out early if they want. This is different from callable bonds, where the company can choose to pay back the bond early.