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LOS e: Identify the common options embedded in a bond issue, explain the importance of embedded options, and state whether such options benefit the issuer or the bondholder.
Q1. Which of the following embedded options most likely benefits the bondholder?
A) Prepayment option on an amortizing security.
B) Put provision at par on a bond that is trading at a premium.
C) Interest rate cap on a floating-rate bond.
Q2. Which of the following embedded options benefits the bond investor?
A) Call provision.
B) Prepayment option.
C) Put provision.
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发表于 2009-3-2 15:07
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