does a floating rate bond have volatility risk?作者: lc26mizzou 时间: 2011-7-11 15:12
never mind, volatility risk only applies to option bonds. for some reason i thought of a floating rate bond as a bond that has a bunch of interest rate options, but that would only be the case if there was a cap or a floor.
[Edit]
that gave rise to another question. Wouldnt a bond with a cap or a floor have volatility risk, since options increase in value if there is more volatility?
Edited 1 time(s). Last edit at Thursday, December 3, 2009 at 03:07PM by s302632.作者: Londonrocks 时间: 2011-7-11 15:12
"but it seems counter intuitive to have a floating bond with a collar have options also"
thanks, but i dont understand what you mean by the above quote.
