puttable

(adjective)

Puttable bond (put bond, putable, or retractable bond) is a bond with an embedded put option. The holder of the puttable bond has the right, but not the obligation, to demand early repayment of the principal.

Related Terms

Examples of puttable in the following topics:

  • Other Features

    • Price of puttable bond = Price of straight bond + Price of put option
    • Price of a puttable bond is always higher than the price of a straight bond because the put option adds value to an investor.
    • Yield on a puttable bond is lower than the yield on a straight bond.

  • Maturity Date

    • Bonds can also be puttable, meaning that the holder has the right, but not the obligation, to demand early repayment of the principal.

  • Yield to Maturity

    • Yield to worst: when a bond is callable, puttable, exchangeable, or has other features, the yield to worst is the lowest yield of yield to maturity, yield to call, yield to put, and others.

  • Call Provisions

    • The price behavior of a callable bond is the opposite of that of puttable bond.