Due to the impact that sudden events could have in the value of bonds, event risk covenants, or provisions, are included in the

Question

3 years ago

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Due to the impact that sudden events could have in the value of bonds, event risk covenants, or provisions, are included in the

issuance of some corporate bonds. This provision allows investors to turn in their bonds to the issuer and get the value equal to the par value in order to protect investors against rising rates. Such a bond is called .

Business

1 answer:

Natalka [10] · Answer 1 · 2022-05-31T05:20:13+03:00

Answer:

A puttable bond.

Explanation:

According to the corporate finance institute, "A puttable bond (put bond or retractable bond) is a type of bond that provides the holder of a bond (investor) the right, but not the obligation, to force the issuer to redeem the bond before its maturity date. Puttable bonds are directly opposite to callable bonds."

A puttable bond (put bond, putable or retractable bond) has an embedded put option, giving the bondholder the right, but not the obligation, to demand early repayment of the principal, with the put option exercisable on one or more specified dates.

It is a kind of protection offered to investors so that they could "turn in their bonds to the issuer and get the value equal to the par value."