I buy a 10-year callable bond that is not callable for the first 5 years and then
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Question:
I buy a 10-year callable bond that is not callable for the first 5 years and then callable at par thereafter. If interest rate volatility rises and all else remains the same, what happens to the value of my callable bond. What if I am comparing two callable bonds that are identical (10 year bonds). However Bond A is not callable for the first 3 years and Bond B is not callable for the first 5 years.
What bond would you pay more for?
Related Book For
Principles of Corporate Finance
ISBN: 978-0077404895
10th Edition
Authors: Richard A. Brealey, Stewart C. Myers, Franklin Allen
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