Simple Options

CFA Level II Fixed Income
#1

In reading 37:VALUATION AND ANALYSIS: BONDS WITH EMBEDDED OPTIONS

There are two simple options which are the callable bond and the putable bond. Based on the definition stated in the material, both of them have the same effect which is returning the bond to the issuer however they only difference between the two options is who has the upper hand of taking the decision. In the callable bond, the issuer has the upper hand to call the bond. In the putable bond, the investor has the upper hand to force the issuer to take the bond back.

Is that correct?

#2

That is correct, a callable bond gives the issuer the right, but not the obligation, to call back the bond at a pre-specified date and price. A putable bond gives the investor the right, but no the obligation, to sell the bond back to the issuer at a pre-specified price and date.