Immediate receipt of principal plus premium produces

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Reference no: EM131020304

A bond with a put option: (1) Is attractive because the immediate receipt of principal plus premium produces a high return. (2) Is more likely to be puttable when the yields to maturity are higher than coupon rates. (3)Will usually have a higher yield than a similar non-puttable bond. (4) Buyer can only put the bonds if the firm defaults on an interest payment.

Reference no: EM131020304

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