问题如下：
If the Brown and Company forecast comes true, which of the following is most likely to occur? The value of the embedded option in:
选项：
A. Bond 3 decreases.
B. Bond 4 decreases.
C. both Bond 3 and Bond 4 increases.
解释：
A is correct.
All else being equal, the value of a put option decreases as the yield curve moves from being upward sloping to flat to downward sloping (inverted). Alternatively, a call option’s value increases as the yield curve flattens and increases further if the yield curve inverts. Therefore, if the yield curve became inverted, the value of the embedded option in Bond 3 (putable) would decrease and the value of the embedded option in Bond 4 (Callable) would increase.
题目中说到的是brown和公司预测yield curve将会inverted，代表短期利率上升，长期利率下降！那么我们的option value应该根据短期还是长期来估计呢？
