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24 Jan 2019
Bonds are sometimes subject to call provisions which allow the lender to repurchase the bond at some future date for a specified price.1.) What practical impact does this have on the desirability of this investment? Explain your answer.2.) Aside from interest rate risk which affects all bonds, does a call provision create any other risk for the owner of such a bond?2.) How might such a call provision affect other aspects of the bond issuance such as the coupon rate?
Bonds are sometimes subject to call provisions which allow the lender to repurchase the bond at some future date for a specified price.1.) What practical impact does this have on the desirability of this investment? Explain your answer.2.) Aside from interest rate risk which affects all bonds, does a call provision create any other risk for the owner of such a bond?2.) How might such a call provision affect other aspects of the bond issuance such as the coupon rate?
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Beverley SmithLv2
26 Jan 2019