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With any other factors remaining unchanged, which of the following statements regarding bonds is not valid? The price of a callable bond increases when interest

  1. With any other factors remaining unchanged, which of the following statements regarding bonds is not valid?

    • The price of a callable bond increases when interest rates increase

    • Issuance of a callable bond is equivalent to a short position in a straight bond plus a long call option on the bond price

    • The put feature in a puttable bond lowers its yield compared with the yield of an equivalent straight bond

    • Duration is a function of time and yield

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