Q14, here’s the explanation: callable bonds will outperform bullet maturities as the probability of an early call diminishes does that make any sense? Pcallable = Pnoncallable - Pcall right?
Yes. And Putable bonds = treasury + put option
bigwilly Wrote: ------------------------------------------------------- > Yes. And Putable bonds = treasury + put option yea just found this thread about why callable bonds outperform bullets in rising interest rates, can’t say i agree but if this is what cfai wants…
so putable bond will also outperform bullets when interest rates increase ? and if interest rates decrease ?