Question #86
Reading: Reading 27 Valuation and Analysis of Bonds With Embedded Options
PDF File: Reading 27 Valuation and Analysis of Bonds With Embedded Options.pdf
Page: 27
Status: Unattempted
Question
On a given day, a bond with a call provision rose in value by 1%. What can be said about the level and volatility of interest rates?
Answer Choices:
A. The only possible explanation is that level of interest rates fell
B. A possibility is that the level of interest rates remained constant, but the volatility of interest rates rose
C. A possibility is that the level of interest rates remained constant, but the volatility of interest rates fell
No explanation available for this question.