bdavi77962

rus1bus Wrote:
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> Level 1 does not say anything about Value of
> Embedded Call Option changing with Interest Rates.
> And i think, establishing a relationship between
> them is not relevant either.
>
> It only talks about Value of Embedded Call Option
> changing with Interest Rate Volatility.

it is part of LEVEL 1

see Level 1 CFAI book 5 page 24
"
...when int rates decline ... the price of call option ...increases because the call option becomes more valuable to the issuer.

similarly, when int rates rise,... the price of embedded call option declines."