All else equal an increase in expected yield vola
All else equal, an increase in expected yield volatility is most likely to cause the price of a:
A.callable price to increase.
B.callable price to decrease.
C.putable price to decrease.
参考解答
413***101
2024-11-14 17:48:14
Ans:B;
An increase in expected yield volatility increases the values of both put options and call options.
However,
Value of a callable bond
= Value of an option-free bond – Value of the call
Note here the call option is retained by the issuer.
Value of a putable bond
= Value of an option-free bond + Value of the put
Note here the put option is owned by the bond holder.
Therefore, an increase in expected yield volatility will cause the price of a callable price to decrease and a putable price to increase. Therefore B is the correct answer.
相似问题
Given two otherwise identical bonds when interest
Given two otherwise identical bonds, when interest rates rise, the price of Bond A declines more than the price of Bond B
A fixed income portfolio manager owns a $4 million
A fixed income portfolio manager owns a $4 million par value non-callable bond The bond’s duration is 5 4 and the current
A level payment fixed-rate fully amortizing mort
A level payment, fixed-rate, fully amortizing mortgage loan for $220,000 is obtained with a term of 15 years, a mortgage ra
Which of the following statements about debt secur
Which of the following statements about debt securities is most likely correct?A Insured bonds are bonds collateralized by a
If an institutional investor wants to borrow money
If an institutional investor wants to borrow money for 30 days to finance a bond purchase, which of these is most likely to be the lowest loan rate available?A Term repo rateB Call money rateC Broker loan rate
