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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.

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