Question-26: What do you mean by option-free bond?

Answer: These are the bonds which does not have any in-built option like callable, puttable and convertible.

Question-27: Is Bond price and expected cash-flow from that bond is related?

Answer: Yes, this is always the first thing which is considered to calculate the price of a bond.

Question-28: What are the possible cashflow for option Free Bond?

Answer: option free bond has following component as part of the cash-flow

• Periodic Coupon until maturity date (Weekly, monthly, quarterly, semiannually and annually)
• Par value at maturity

Even determining cash-flow of a bond is not simple.

Question-29: For which kind of bond future cash-flow is fixed?

Answer: It usually fixed for the fixed rate and option free (not callable, not puttable and not convertible) bonds.

Question-30: Why Callable and Puttable bonds cashflow is not certain?

Answer: In case of

• Callable bond borrower can anytime call the bond.
• Puttable, any time investor can put the bond

And for that call date or put date is not known in advance. Hence, cashflow is not certain.