Page 21 - FINAL CFA SLIDES DECEMBER 2018 DAY 15
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Session Unit 16:
54. Understanding Fixed Income Risk and Return
A putable bond has greater convexity than an otherwise identical option-free bond. In Figure 4 we illustrate the
price-yield relation for a putable bond. At higher yields, the put becomes more valuable so that the value of the
putable bond falls less than that of an option-free bond as yield increases
tanties
