hard · Debt Capital Markets
If an issuer utilizes portability to avoid a 101% put, but the bonds are trading in the secondary market at 105% of par, what is the likely investor reaction?
- The market price will immediately drop to 101% to match the avoided put price.
- Investors will be indifferent or pleased, as the bonds are worth more in the market than the put price.
- Investors will sue to force the portability test to fail so they can capture the 101% price.
- Investors will be frustrated because they lose the opportunity to sell at 101%.
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