Why is an option-adjusted spread more suitable for a bond with an embedded option than a yield spread?
Answer to relevant QuestionsSuppose a client observes the following two benchmark spreads for two bonds: Bond issue U rated A: 150 basis points Bond issue V rated BBB: 135 basis points Your client is confused because he thought the lower-rated bond ...Explain why it is inappropriate to use one yield to discount all the cash flows of a financial asset. What is a government-sponsored enterprise? Assuming a $100,000 par value, calculate the dollar price for the following Treasury coupon securities given the quoted price. (a) The quoted price for a $100,000 par value Treasury coupon security is 84.14. What is the ...Answer the below questions. (a) Why has there been a decline in corporate bond liquidity? (b) Why is e-trading of corporate bonds that rely less on dealer inventory important?
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