Final answer:
A bond with a put option allows investors to force the issuer to repurchase the debt at specified dates, adding security for the bondholder and reducing their risk. These bonds typically trade at a premium relative to bonds without this provision and tend to offer a lower yield due to the reduced risk.
Step-by-step explanation:
The bond provision that allows an investor to force the issuer to repurchase the debt at specified dates is known as a put option. This is a feature that adds security for the bondholder, as it gives them the right, but not the obligation, to sell the bond back to the issuer at a predetermined price before maturity, typically at face value. The presence of a put option can often make the bond more attractive to investors, as it reduces their risk.
Bonds with this provision tend to trade at a premium compared to similar bonds without such provisions due to the increased flexibility and reduced risk they offer to investors. However, because the issuer carries more risk, these bonds may also offer a lower yield than comparable bonds without the put option. Investors might accept this lower yield in exchange for the added protection against potential declines in the bond's value or deteriorating financial conditions of the issuer.