Why should I choose AnalystNotes?

AnalystNotes specializes in helping candidates pass. Period.

Find out more

Basic Question 2 of 4

An option free bond is trading at $105. Which price is LEAST LIEKLY for a callable bond with the same maturity and credit risk?

A. $102
B. $104
C. $106
Check Answer Previous Q Next Q Print

User Contributed Comments 1

User Comment
pingpong Investors get a discount for a callable bond. Investors are willing to pay a premium for a putable bond.
You need to log in first to add your comment.
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes

Barnes

Learning Outcome Statements

explain the relationships between the values of a callable or putable bond, the underlying option-free (straight) bond, and the embedded option;

describe how the arbitrage-free framework can be used to value a bond with embedded options;

CFA® 2025 Level II Curriculum, Volume 4, Module 28.