Question

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

Answer 1

The correct answer is letter "A": Putable bond.

Step-by-step explanation:

Putable bonds, also known as retraction bonds, are those that give bondholders the right to request the issuer to repurchase the bonds at a specific date and price, before the maturity date. In the repurchase, the price set is typically the par value.

Answer 2

a) Putable bond

Step-by-step explanation:

The bonds which can be sold to the issuer before the maturity date of the bond is termed as putable bond. This bond gives the right to the bondholder to sell off his or her bond accordingly. In the excerpt, Nazim wanted to sell off his bond to the issuer before the maturity date. Hence, he needs to pick the Putable bond feature to do so.