Can somone explain the following statment:
The price of Bond X is influenced by all par rates relevant to its term to maturity, but is mostt sensitive to changes in one year and three year par rates
CALL:
3.5% Annual
Time to maturity 3 years
Type of bond: Callable at par in one year
The answer says: The primary driver of the call decision is the two year forward rate one year from today, which is most significantly affected by one and three year par rates