If market interest rates rise the price of a call
If market interest rates rise, the price of a callable bond, compared to an otherwise
identical option-free bond, will most likelydecrease by:
A.more than the option-free bond.
B.the same amount as the option-free bond.
C.less than the option-free bond.
参考解答
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2024-11-14 19:17:13
Ans:C;
Value of a callable bond
= Value of an option-free bond – Value of the call
As interest rates rise, the value of the call decreases by a decreasing amount.
Therefore, as interest rates rise, the value of a callable bond decreases by a less amount than an option-free bond.
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