As compared to an equivalent noncallable bond, should a callable bond’s yield be higher, lower or the same and why?
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As compared to an equivalent noncallable bond, should a callable bond’s yield be higher, lower or the same and why?
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- All else equal, which of the following factors would cause a bond to have a higher yield? I. A bond with a higher rating (vs. a bond with a lower rating) II. A callable bond (vs. a non-callable bond) III. A Debenture (vs. an asset-backed bond)Is current yields affected by whether the bond is callable ?Discuss how the price of a puttable bond will differ from the price of a similar, plain vanilla bond and the main determinants of this price difference.
- Explain why are the bond prices for A and B different or the same? Explain your answer clearly.Which of the following bonds has the least reinvestment risk?A. A bond that has a higher coupon rate than the yield-to-maturityB. A bond that has a lower coupon rate than the yield-to-maturityC. A zero-coupon bondA callable bond will typically have a ________ yield than an otherwise identical bond without a call feature because ________. A) lower, the firm loses flexibility with a callable bond B) higher, the firm loses flexibility with a callable bond C) lower, the option to call a bond is valuable D) higher, the option to call a bond is valuable
- The difference in yield between a credit-risky bond and a credit-risk-free bond of similar maturity is called its yield spread. Select one: True FalseTrue or False? Macaulay duration of measure of the curvature in the relationship between bond prices and bond yields.The yield spread between two bond issues reflect more than just credit risk. What other factors would the spread reflect?
