An issuer that would like to conserve near-term cash outflows would most likely issue a:
A. putable bond.
B. callable bond.
C. convertible bond.
That they will like the lowest cash outflows.
In this case which bond would you expect to have the lowest coupons given the same amount of par borrowed.
Listen to Mikey.
A callable bond can be called by the issuer in exchange for cash.
A putable bond can be put by the holder in exchange for cash.
A convertible bond can be exercised by the holder in exchange for shares in the issuer.
A putable bond carries a lower yield than a callable bond from the same issuer as a callable benefits the issuer (the issuer has the option to exercise) while a putable bond benefits the holder (the holder has the option to exercise)
But a convertible bond carries a lower yield than either a callable or a putable bond. A rare exception is a `busted convert’ where the stock price is so low compared to the conversion price as to make the convert’s embedded option near worthless.
The question specifies `near-term’ which I presume means the embedded option will not be exercised. So exercise is not relevant to the question, but the convert is exercised for stock while the others are exercised for cash.
To conserve near-term cash flows means to take actions or implement strategies aimed at preserving or protecting the cash resources of a business or individual in the short term. This is typically done to ensure that there is enough liquidity or cash on hand to meet immediate financial obligations, such as paying bills, salaries, or other expenses.