In each of the following cases, identify the buyer and seller of the option, how the value

Question:

In each of the following cases, identify the buyer and seller of the option, how the value of the option is indicated, and when (in what interest rate environment) the option will be exercised:
a. A bank buys a five year GNMA bond that is callable at par after one year, yielding 6.88 percent. The matched duration zero Treasury rate is 6.11 percent.
b. A bank buys an FHLB pass through MBS at par yielding 7.47 percent. The matched- duration zero Treasury rate is 6.48 percent. Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...