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Basic Question 0 of 5
An option free bond is trading at $105. Which price is LEAST LIEKLY for a callable bond with the same maturity and credit risk?
B. $104
C. $106
A. $102
B. $104
C. $106
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. |
Thanks again for your wonderful site ... it definitely made the difference.
Craig Baugh
Learning Outcome Statements
explain how interest rate volatility affects the value of a callable or putable bond;
explain how changes in the level and shape of the yield curve affect the value of a callable or putable bond;
calculate the value of a callable or putable bond from an interest rate tree;
CFA® 2025 Level II Curriculum, Volume 4, Module 28.