A company is planning to issue deep discount bonds. As a financial advisor, you are required to suggest two important terms and conditions of issuing the said bond so as to minimise risk of the issuing company.

A deep discount bond is a zero coupon bond issued at a very heavy discount which is due to the fact that such bonds have very long maturity typically more than 20 years. Since these bonds are of very long maturity, market conditions may change during this period which may be difficult to forecast in advance. In order to safeguard its interest, it is suggested to consider following two important terms and conditions to minimize risk: The Company may introduce call-option at different timings during the tenure of the bonds giving it right to call the bonds back if the market conditions are not favourable. The Company may also link the maturity amount to a benchmark yield so that unfavourable changes in market yields can be taken care of.