• 2022-05-28
    Effective duration is essential to measuring interest rate risk of a bond with an embedded call option because:
  • it is measured as sensitivity to changes in the yield-to-worst.

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      8.The risk investors have that a callable bond will be called when interest rates fall is Call risk. ( )

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      When the interest rate on a bond is ____... rate will _________

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      The coupon rate of bond is the interest rate specified in the bond, which is equal to the ratio of the annual interest over the value of bond.

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      When the interest rate on a bond is below the equilibrium interest rate, there is excess _________ in the bond market and the interest rate will _________ A: demand; rise B: demand; fall C: supply; fall D: supply; rise

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      When the interest rate on a bond is above the equilibrium interest rate, in the bond market there is excess ________ and the interest rate will ________. A: demand; rise B: demand; fall C: supply; fall D: supply; rise