A. It ignores the impact of embedded options.
B. It is relatively time consuming.
C. It cannot be used for stress testing.
第1题
Lei Lee makes the following statement about putable bonds: As yields rise, the price of putable bonds will fall more quickly than comparable option-free bonds (beyond a critical point) due to the decline in value of the embedded put option. Meimei Han adds that as yields fall, the price of putable bonds will climb more quickly than comparable option-free bonds (beyond a critical point) due to the increase in value of the embedded put option. Are their statements about putable bonds correct?
A. Neither statement is correct.
B. Both statements are correct.
C. Only one of the statements is correct.
第2题
Bond B is currently trading at 1,015 with an effective duration of 6.88. If the market interest rate fell by 25 basis points, the new price would beclosest to:
A. $998
B. $1,015
C. $1,032
第3题
Changes in a bond’s cash flows associated with yield changes would be reflected in the bond’s:
A. modified duration
B. Macaulay duration
C. effective duration
第4题
Jim King makes the following statement about callable bonds: As yields rise, the callable bond behaves much the same as a comparable option-free bond. Kate King adds that as yields fall, the price of callable bonds will rise less quickly than comparable option-free bonds (beyond a critical point). Are their statements about callable bonds correct?
A. Neither statement is correct.
B. Both statements are correct.
C. Only one of the statements is correct.
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