CFA Practice Question

CFA Practice Question

Which of the following is incorrect?
A. Call money rate is the interest rate charged to a broker on the money lent to a buyer for margin purchases.
B. An embedded option valuable to the bondholder would be Right to Call.
C. An embedded option valuable to a issuer would be Cap on a Floating Rate Bond.
Explanation: An embedded option valuable to the issuer (buyer) would be Right to Call (Put).

User Contributed Comments 2

User Comment
reganbaha call money rate is the rate that a bank charges a broker to provide funds for margin loans. The broker will add a premium on top to take his cut.
GBolt93 Believe Reganbaha is correct as per one of the earlier questions that was the definition given. Note it is the rate charged to a broker, not by a broker.
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