CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

Holding all other factors constant, an increase in expected yield volatility will cause the price of a ______.
A. putable bond to increase
B. callable bond to increase
C. putable bond to decrease
Explanation: Increasing yield volatility increases the value of both put options and call options, which increases the value of a putable bond (which is long the put option) but decreases the value of a callable bond (which is short the call option.)

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