CFA Practice Question

There are 252 practice questions for this study session.

CFA Practice Question

All else being equal, the value of a callable bond is the highest if the yield curve is:

A. upward sloping.
B. flat.
C. downward sloping.
Correct Answer: A

The value of a call option increases as the yield curve moves from being upward sloping to flat, to downward sloping. If the value of the straight bond remains constant, the value of the callable bond will decrease.

User Contributed Comments 1

User Comment
Stoibayev The answer seems inconclusive.
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