Given a parallel shift upwards in the yield curve, what is the most likely ordering in terms of expected decline in value—from least to most—for otherwise com- parable bonds? Assume that the embedded options are deep out-of-the-money.
a Callable bond, option-free bond, putable bond
b Putable bond, callable bond, option-free bond
c Putable bond, option-free bond, callable bond
Solution:
Answer: B is correct.
老师好，当价格下降，我能理解putable bond是value下降最少的。但是callable 还支付了一个option fee，所以不应该value下降的比option-free bond要多嘛
为啥不选C呢，谢谢老师
