Answer the below questions. (a) What is an embedded option in a bond? (b) Give three examples
Question:
(a) What is an embedded option in a bond?
(b) Give three examples of an embedded option that might be included in a bond issue.
(c) Does an embedded option increase or decrease the risk premium relative to the base interest rate?
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a An embedded option is an option found in a bond that includes a provision giving either the bondho...View the full answer
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