Business, 06.06.2020 16:58 wardlawshaliyah
You could invest in one of two callable bonds, each of which is currently callable and which both have the same maturity. The first one, Bond A, will gain 15% if rates fall 1% and lose 20% if rates go up 100bp. The second one, Bond B, will gain 22% if rates fall 1% and lose 16% if rates rise 1%. You know that Bonds A and B differ in their coupon, but you do not know which has a coupon of 7% and which has a coupon of 13%. Currently yields for both issuers are at 8%. What is the coupon on bond A
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You could invest in one of two callable bonds, each of which is currently callable and which both ha...
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