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Value of a putable bond is A. O value of callable bond -option cost B.O value of nonputable bond + value of put option C. O value of nonputable bond - value of put option D. O value of putable bond + strike price

Value of a putable bond is A. O value of callable bond -option cost B.O value of nonputable bond + value of put option C. O value of nonputable bond - value of put option D. O value of putable bond + strike price

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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**Question 4** The value of a putable bond is: A. ○ value of callable bond - option cost B. ○ value of nonputable bond + value of put option C. ○ value of nonputable bond - value of put option D. ○ value of putable bond + strike price *Explanation:* A putable bond is a type of bond that allows the bondholder the right to sell the bond back to the issuer at a specified price before maturity. This problem asks for the correct way to value a putable bond.
Transcribed Image Text:**Question 4** The value of a putable bond is: A. ○ value of callable bond - option cost B. ○ value of nonputable bond + value of put option C. ○ value of nonputable bond - value of put option D. ○ value of putable bond + strike price *Explanation:* A putable bond is a type of bond that allows the bondholder the right to sell the bond back to the issuer at a specified price before maturity. This problem asks for the correct way to value a putable bond.
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