CFA Practice Question

There are 252 practice questions for this study session.

CFA Practice Question

The higher the interest rate volatility, the ______ the value of the bond call option and the ______ the value of the bond put option.

A. higher, higher
B. lower, lower
C. lower, higher
D. higher, lower
Correct Answer: A

The value of any embedded option, regardless of the type of option, increases with interest rate volatility.

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