A callable bond is sometimes described as a combination of a noncallable bond and an option. Explain

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A callable bond is sometimes described as a combination of a noncallable bond and an option. Explain why this description is appropriate, and explain how these two features affect the price of a callable bond.

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Fundamentals of Investments

ISBN: 978-0132926171

3rd edition

Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey

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Question Posted: Mar 16, 2016 02:58 AM

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A callable bond is sometimes described as a combination of a noncallable bond and an option. Explain

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A callable bond incorporates the right of the issuer to pay off the bond pri...View the full answer

Fundamentals of Investments

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