CFA Practice Question

There are 252 practice questions for this study session.

CFA Practice Question

In the binomial model a bond is called if:

A. the bond's market price is less than the call price.
B. the present value of its future cash flows is more than the call price.
C. the present value of its future cash flows is less than its market price.
Correct Answer: B

The issuer will exercise the call option if the present value of its future cash flows is higher than the call price.

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