- 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
The value of a putble bond will rise if:
II. The level of interest rates declines.
III. The shape of the yield curve becomes more upward sloping.
I. The volatility of interest rates goes down.
II. The level of interest rates declines.
III. The shape of the yield curve becomes more upward sloping.
A. I and II
B. II and III
C. I, II and III
Explanation: I. the value of put option will decline.
II. The value will rise but not as much as a straight bond.
III. the value of put option will increase.
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