Which of the following sentences about bonds’ optional features is true? Explain A.A borrower will be willing to pay a higher yield on a bond with a put option. B.A callable bond allows the borrower to make an early repayment of the principal. C.The yield on a puttable bond will be higher than the yield on a bond with similar characteristics but no optional features. D.An investor will be willing to pay more for a bond with a call back provision
Which of the following sentences about bonds’ optional features is true? Explain A.A borrower will be willing to pay a higher yield on a bond with a put option. B.A callable bond allows the borrower to make an early repayment of the principal. C.The yield on a puttable bond will be higher than the yield on a bond with similar characteristics but no optional features. D.An investor will be willing to pay more for a bond with a call back provision
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 15QTD
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Question
Which of the following sentences about bonds’ optional features is true? Explain
A.A borrower will be willing to pay a higher yield on a bond with a put option.
B.A callable bond allows the borrower to make an early repayment of the principal.
C.The yield on a puttable bond will be higher than the yield on a bond with similar characteristics but no optional features.
D.An investor will be willing to pay more for a bond with a call back provision.
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