Why should I choose AnalystNotes?
Simply put: AnalystNotes offers the best value and the best product available to help you pass your exams.
Basic Question 0 of 11
Two bonds with identical maturity, coupon size and default risk are selling at par value. The first bond is an option-free bond. The second bond is a callable bond. In response to a 100 basis point decrease in required return:
B. the price of the second will increase by more than the price of the first.
C. the price of the first will decrease by more than the price of the second.
A. the price of the first will increase by more than the price of the second.
B. the price of the second will increase by more than the price of the first.
C. the price of the first will decrease by more than the price of the second.
User Contributed Comments 0
You need to log in first to add your comment.
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.