SIE practice questionmediumPutable Bonds
An investor most likely purchases a putable bond to:
- AAvoid all risk
- BForce the issuer to increase the coupon
- CHave the option to sell the bond back if interest rates rise✓ Correct answer
- DReceive double interest payments
Explanation
Why C — Have the option to sell the bond back if interest rates rise
Putable bonds allow investors to sell back at set dates—useful if rates rise. They do not force higher coupons, eliminate all risk, or double interest.
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