FNCE_235_725_Fall2010_Ch22_28

FNCE_235_725_Fall2010_Ch22_28 - A d v e n t u r e s i n D e...

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Unformatted text preview: A d v e n t u r e s i n D e b e n t u r e s W o r k s h e e t C h a p t e r 2 1 : D e j a V u , L e c t u r e N o t e s P a g e 1 3 9 A d v e n t u r e s i n D e b e n t u r e s C o p y r i g h t c 2 4 b y M i c h a e l R . G i b b o n s P a r t F i v e F i x e d R a t e B o n d s w i t h E m b e d d e d O p t i o n s 2 2 : B o n d s w i t h E m b e d d e d O p t i o n s 1 . . . . . . . . 1 4 2 2 3 : B o n d s w i t h E m b e d d e d O p t i o n s 2 . . . . . . . . 1 7 3 P a r t F i v e : F i x e d R a t e B o n d s w i t h E m b e d d e d O p t i o n s P a g e 1 4 A d v e n t u r e s i n D e b e n t u r e s P a r t F i v e : F i x e d R a t e B o n d s w i t h E m b e d d e d O p t i o n s P a g e 1 4 1 A d v e n t u r e s i n D e b e n t u r e s C o p y r i g h t c 2 4 b y M i c h a e l R . G i b b o n s C h a p t e r 2 2 B o n d s w i t h E m b e d d e d O p t i o n s 1 P r e f a c e . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 4 4 A n n o u n c e m e n t s a n d A s s i g n m e n t s . . . . . . . . . . . . . 1 4 7 L e c t u r e N o t e s . . . . . . . . . . . . . . . . . . . . . . . . 1 4 8 P r a c t i c e Q u e s t i o n s w i t h S o l u t i o n s . . . . . . . . . . . . . 1 6 8 Q u e s t i o n s . . . . . . . . . . . . . . . . . . . . . . . . . . 1 7 C h a p t e r 2 2 : B o n d s w i t h E m b e d d e d O p t i o n s 1 P a g e 1 4 2 A d v e n t u r e s i n D e b e n t u r e s T h e p r o b l e m w i t h l e a r n i n g f r o m e x p e r i e n c e i s w e g e t t h e t e s t b e f o r e t h e l e s s o n . A l f r e d E . N e w m a n C h a p t e r 2 2 : B o n d s w i t h E m b e d d e d O p t i o n s 1 P a g e 1 4 3 A d v e n t u r e s i n D e b e n t u r e s C o p y r i g h t c 2 4 b y M i c h a e l R . G i b b o n s P r e f a c e t o B o n d s w i t h E m b e d d e d O p t i o n s 1 1 . ) S u m m a r y o f C h a p t e r . W e n o w t u r n o u r a t t e n t i o n t o d e f a u l t-f r e e b o n d s w h i c h p r o v i d e i m p l i c i t o p t i o n s t o e i t h e r t h e b o n d h o l d e r o r t h e i s s u e r o r b o t h . E v e n t h o u g h t h e b o n d s m a y b e d e f a u l t-f r e e , t h e t i m i n g a n d / o r t h e m a g n i t u d e o f t h e c a s h o w s b e c o m e u n c e r t a i n . W h i l e t h e r e a r e m a n y t y p e s o f o p t i o n s w h i c h c o u l d b e e m b e d d e d w i t h i n a b o n d , w e w i l l f o c u s o n c a l l a b l e b o n d s d u r i n g t h e l e c t u r e s . C a l l a b l e b o n d s a r e a s i g n i fi c a n t p o r t i o n o f t h e m a r k e t f o r fi x e d i n c o m e s e c u r i t i e s e s p e c i a l l y i f y o u c o n s i d e r m o r t g a g e s , w h i c h a r e c a l l a b l e a n n u i t i e s . O n c e c a l l a b l e b o n d s a r e e x p l a i n e d , t h e o t h e r t y p e s o f e m b e d d e d o p t i o n s a r e p r e t t y s t r a i g h t f o r w a r d . I n f a c t , t h e p r o b l e m s e t q u e s t i o n s w i l l f...
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This note was uploaded on 03/27/2012 for the course FNCE 235 taught by Professor Roussanov during the Spring '09 term at UPenn.

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FNCE_235_725_Fall2010_Ch22_28 - A d v e n t u r e s i n D e...

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