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An analyst is evaluating the following two statements about putable bonds:
Statement #1: As yields fall, the price of putable bonds will rise less quickly than similar option-free bonds (beyond a critical point) due to the decrease in value of the embedded put option. Statement #2: As yields rise, the price of putable bonds will fall more quickly than similar option-free bonds (beyond a critical point) due to the increase in value of the embedded put option.The analyst should: A. disagree with both statements. B. agree with both statements. C. agree with only one statement. |