- CFA Exams
- CFA Level I Exam
- Study Session 13. Fixed Income (2)
- Reading 34. Valuation and Analysis of Bonds with Embedded Options
- Subject 3. Valuation of Default-Free Callable and Putable Bonds
CFA Practice Question
All else being equal, the value of a call option is the highest if the yield curve is:
A. upward sloping.
B. flat
C. downward sloping.
Explanation: The value of a call option increases as the yield curve moves from being upward sloping to flat, to downward sloping.
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