标题: Fixed income question from CFAI Mock [打印本页] 作者: kseniaru 时间: 2013-4-10 17:47 标题: Fixed income question from CFAI Mock
A US investor who purchase an optionfree bond with a 7% coupon rate maturing in 20 years, and issued by a US based company is most likely exposed to:
A: volatility risk and credit risk
B: event risk and interest rate risk
C: volatility risk and yield curve risk
Correct answer is B. I answered A.
Why wouldn’t A be the better answer?
The question implies a nongovernmental bond with some measure of credit risk, meaning a possible downgrade (which narrows the likely answer down to A). A 20 year maturity implies greater volatility or interest rate rate risk (meaning A or B). Event risk relates to something beyond simply a downgrade in credit ratings.作者: former 时间: 2013-4-10 17:47
ok, thanks作者: bluejazzy 时间: 2013-4-10 17:47
Remeber for bonds with embedded options have Volatility risk
The more volatile the interst rates, the more is the value of “bond Option” and this affects its price…
