Bond A is not putable; bond B is putable. Investors will require a lower yield on bond __ and will pay ____ for the bond.

Question

Quizplus · Accepted Answer

Investors will require a lower yield on bond B because the put option provides them with additional security, allowing them to sell the bond back to the issuer at a predetermined price. This makes bond B more attractive, leading investors to pay more for it.

Bond a Is Not Putable; Bond B Is Putable