SIE practice questionmediumPutable Bonds
A put feature in a bond will tend to:
- AIncrease the bond's yield
- BLower the bond's yield✓ Correct answer
- CHave no effect on the bond's yield
- DMake the bond convertible
Explanation
Why B — Lower the bond's yield
Put features benefit investors, so the issuer can offer a lower yield. They do not make a bond convertible; the effect is to reduce, not increase, required yield.
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