53.All else equal, the most likely effect of an increase in yield volatility on the price of a callable bond and the price of a putable bond, respectively, would be:
| Callable bond | Putable bond | A | Increase | Increase | B | Increase | Decrease | C | Decrease | Increase | D | Decrease | Decrease |
Select exactly 1 answers from the following: A. B. C. D. 答案和详解如下! Feedback: Correct answer: C Fixed Income Analysis for the Chartered Financial Analyst Program, 2nd edition, (Frank J. Fabozzi Associates, 2004), pp.42-43 2006 Modular Level I, Vol. IV, pp. 51-52 Study Session 14-63-m explain how yield volatility affects the price of a bond with an embedded option and how changes in volatility affect the value of a callable bond and a putable bond
The greater the expected yield volatility, the greater the value of an option, which will decrease the price of a callable bond and increase the price of a putable bond.
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