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- 2011-7-2
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- 2014-6-28
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Why would a bond with a call option trade at a premium?
LOS 29b: It says that due to the fact most bonds are intermediate term bullets, bonds with embedded options will trade at premium prices due to their scarcity value.
If a bond is callable, then wouldn't it trade for a discount vs. a noncallable bond, since it carries with it the threat of being called away if interest rates decline? Why would an investor pay a premium just because its scarce? |
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发表于 2011-7-13 17:02
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