Question

A 'Put' option, in case of debt instruments issued by a company is ______________________________.

• A. The right of the company to buy the securities after a specified period of time but before maturity
• B. Obligation of investors to sell the securities after a certain period of time.
• C. Right of the investors to sell the securities of the company after a stated period of time before their maturity.
• D. The obligation of the company to buy the securities after a period of time.
• E. Both (A) and (B) above

Answer 1

The correct option is C Right of the investors to sell the securities of the company after a stated period of time before their maturity.

Debt instrument with 'Put' option are advantageous to the subscriber (investor). The 'Put' option represents the right of the investors to sell the securities to the company after a stated period of time before maturity.