Explain in brief the following types of bonds: (i) Callable Bonds (ii) Puttable Bonds (iii) Masala Bonds (iv) Drop Lock Bonds

(i) Callable bonds: A callable bond has a call option which gives the issuer the right to redeem the bond before maturity at a predetermined price known as the call price (Generally at a premium). (ii) Puttable bonds: Puttable bonds give the investor a put option (i.e. the right to sell the bond) back to the company before maturity. (iii) Masala Bonds: Masala (means spice) bond is an Indian name used for Rupee denominated bond that Indian corporate borrowers can sell to investors in overseas markets. (iv) Drop Lock Bond: It is a Floating Rate Note with a normal floating rate. The floating rate bond would be automatically converted into fixed rate bond if interest rate falls below a predetermined level. The new fixed rate stays till the drop lock bond reaches its maturity.