CFA CFA Level 1 Question of the Week – Fixed Income

Question of the Week – Fixed Income

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    • Avatar of AdaptPrepAdaptPrep
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        When the embedded call option is far out of the money, the
        value of the option is minimal and the callable bond behaves like a vanilla
        bond with positive convexity. As interest rates decline and the option gets closer to being in the money,
        convexity decreases and could even reach a point where it becomes negative.

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