When interest rates fall the price of a callable
When interest rates fall, the price of a callable bond will:
A.rise more than an option-free bond.
B.rise less than an option-free bond.
C.fall less than an option-free bond.
参考解答
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2024-11-14 19:38:18
Ans:B;
The call feature limits the upside price movement of a bond when interest rates fall. The price of a callable bond will not rise above the call price, which leads to that the value of a callable bond will be less sensitive to interest rate changes than an otherwise option-free bond. Therefore B is the correct answer. When interest rates fall, the price of a callable bond will rise less than an option-free bond.
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