last sentence on pg389 (Vol3) - Reading 28. How do you understand this comment? under rising interest rate environment, the callable bond is similar to non-callable bond. it’s less likely to under-perform non-callable bonds. but having trouble with the performance between non-callable bond v.s. bullet bond. there should be some other conditions given, what if bullet bond has short duration? it should outperform non-callable bond with longer duration…
if it helps, try this: draw the usual graph of interest rates (x) and price (y), with a bullet bond and a callable bond now go a lot to the right… they are almost the same