skycfa

"These aren't one off events"

-An unsophisticated borrower that doesn't call their bonds isn't a one off?

Hypothetical CFA question:

UBC Nation issued 5 year callable bonds in March of 2006 with a yield if 5%. It is now March of 2008 and the yield curve has shifted downward. What should ABC do? Ignore transaction costs.

Answer choices:
A. Nothing, the treasurer is unsophisticated.
B. UBC Nation does not exist so the question is irrelevant
C. Continuously callable bonds require at a minimum of 30 days notice
D. Putable bonds do not have more positive convexity than a bullet

Which of your statements would you choose?