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Basic Question 5 of 15
In the binomial model a bond is called if:
B. the present value of its future cash flows is more than the call price.
C. the present value of its future cash flows is less than its market price.
A. the bond's market price is less than the call price.
B. the present value of its future cash flows is more than the call price.
C. the present value of its future cash flows is less than its market price.
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I used your notes and passed ... highly recommended!
Lauren
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.