All else the same, callable bonds have less interest rate sensitivity than noncallable bonds. Why? Is this

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All else the same, callable bonds have less interest rate sensitivity than noncallable bonds. Why? Is this a good thing?

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Fundamentals of Investments Valuation and Management

ISBN: 978-0077283292

5th edition

Authors: Bradford D. Jordan, Thomas W. Miller

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Question Posted: Sep 19, 2012 05:10 AM

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All else the same, callable bonds have less interest rate sensitivity than noncallable bonds. Why? Is this

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Because of the negative convexity effect callable bonds cannot rise in value as far as n...View the full answer

Fundamentals of Investments Valuation and Management

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