Question

a. In terms of option theory, explain the impact on the offering yield of adding a call feature to a proposed bond issue.
b. Explain the impact on both bond duration and convexity of adding a call feature to a proposed bond issue. Assume that a portfolio of corporate bonds is managed to maintain targets for modified duration and convexity.
c. Explain how the portfolio could include both callable and noncallable bonds while maintaining the targets.
d. Describe one advantage and one disadvantage of including callable bonds in this portfolio.



$1.99
Sales1
Views103
Comments0
  • CreatedDecember 17, 2014
  • Files Included
Post your question
5000