Which of the following statements about step-up bonds is NOT true? ...
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Finance
Which of the following statements about step-up bonds is NOT true?
| The relative value of a step-up bond will depend on the holding period, the coupon and the expectation of future interest rates. | ||
| When the bond steps-up (coupon increases), the potential for the issuer to exercise the bonds call option also increases. | ||
| It is possible that when the bond steps-up, the increase in coupon may not keep up with prevailing interest rates. | ||
| The price of a step-up bond is determined in part by the credit risk of the issuer, the prevailing level of interest rates and the value of the embedded call option. | ||
| All of the above are true about step-up bonds. |
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