Contingent claim risk liability, explained, corporate, 2011

DarienHacker

in Curriculum EOC

A non callable corporate bond that hedge the liability of building a hospital. The answer is the investor is exposed to interest rate, cap, and contingent claim risks.

I remember someone here explained non callable corporate bond does have contingent claim risk as it has potential claim on corporate assets.

However, in 2011 CFAI mock #34. The answer says noncallable corporate bond has no contingent claim risk.

WTH?

Roflnadal

We decided the EOC is just a general statement of what to look for when immunizing, not a specific.

Contingent claim not applicable to non-callable debt.

ll11

Their answer is wrong in my opinion, but that's what they want.

NO EXCUSES