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The following information relates to two callable bonds of the same issuer that are currently callable. Estimated Percentage Change in Price if Interest Rates Change
The following information relates to two callable bonds of the same issuer that are currently callable. Estimated Percentage Change in Price if Interest Rates Change by: -100 bps +100 bps Bond A +4 -6 Bond B +11 -8 Both bonds have the same maturity and the yield curve for the issuer is flat. 1. Which of the bonds is most likely the higher coupon bond? Please explain why. 2. Which of the bonds is most likely to be called? Please explain why
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