CURRENT AFFAIRS

Detailed explanation-1: -While a put bond allows the investor to redeem a long-term bond before maturity, the yield generally equals the one on short-term rather than long-term securities. A put bond can also be called a puttable bond or a retraction bond.

Detailed explanation-2: -A puttable bond has a put option that gives bondholders the right to “put” or sell the bond back to the issuer at a specified price before it matures.

Detailed explanation-3: -A callable bond is a bond with a fixed rate where the issuing company has the right to repay the face value of the security at a pre-agreed value before the bond’s maturity. The issuer of a bond has no obligation to buy back the security; he only has the right option to call the bond before the issue.

Detailed explanation-4: -Yield to maturity (YTM) is the overall interest rate earned by an investor who buys a bond at the market price and holds it until maturity.

Detailed explanation-5: -Puttable bonds are the direct opposite of callable bonds, which are bonds that give the issuer right but not the obligation to purchase the bonds back from the investors prior to their maturity date. Puttable bonds can be advantageous to both parties – the issuer and the investor.