Pricing put option bond it


Pricing put option bond it


Option pricing optioon to the amount per share that an option is traded. Prifing holder of the puttable bond has the right, but not the obligation, to demand early repayment of the principal. Therefore, investors sell bonds back to the issuer and may lend proceeds elsewhere at a higher rate. Bondholders are ready to pay for such protection by accepting a lower yield relative to that of a straight bond.Of course, if an issuer has a severe liquidity crisis, it may be incapable of paying for the bonds when the investors wish.




Pricing put option bond it

Pricing put option bond it


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