Rasec

Ok, so I found an "unofficial" answer to this:

For calls on Bonds the Delta drowns out the Rho effect - So pfcfaaf's reasoning is true.
The graph in the book is for equity securities, though it doesn't mention that in the book. In fact I don't remember reading anything on the differences b/w eq/bond options; does anyone have any reference to this in the CFAI texts? or would this not be tested? Iwould think that if there's a prectice Q like the one above it may be tested after all.


TenTen - BTW both answers are correct b/c for an equity call an increase in int rates would still increase the value of the equity call, however as was just posted with a rise in int rates the value of a call on a bond decreases.