An investment manager is considering an incremental position in a callable, putable, or option-free bond with otherwise

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An investment manager is considering an incremental position in a callable, putable, or option-free bond with otherwise comparable characteristics. If she expects a downward parallel shift in the yield curve, it would be most profitable to be:

a. Long a callable bond.

b. Short a putable bond.

c. Long an option-free bond.

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Fixed Income Analysis

ISBN: 9781119850540

5th Edition

Authors: Barbara S. Petitt

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Question Posted: Nov 05, 2023 01:26 AM

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An investment manager is considering an incremental position in a callable, putable, or option-free bond with otherwise

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C is correct The value of a bond with an embedded option is equal to the sum of the value of an opti...View the full answer

Fixed Income Analysis

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