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c describe the backward induction valuation methodology within the binomial interest rate tree framework; Flashcards Preview
L2 47 Valuing Bonds with Embedded Options
> c describe the backward induction valuation methodology within the binomial interest rate tree framework; > Flashcards
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c describe the backward induction valuation methodology within the binomial interest rate tree framework;
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L2 47 Valuing Bonds with Embedded Options
Class (11):
A Evaluate, Using Relative Value Analysis, Whether A Security Is Undervalued, Fairly Valued, Or Overvalued;
B Evaluate The Importance Of Benchmark Interest Rates In Interpreting Spread Measures;
C Describe The Backward Induction Valuation Methodology Within The Binomial Interest Rate Tree Framework;
D Calculate The Value Of A Callable Bond From An Interest Rate Tree;
E Explain The Relations Among The Values Of A Callable (Putable) Bond, The Corresponding Option Free Bond, And The Embedded Option;
F Explain The Effect Of Volatility On The Arbitrage Free Value Of An Option;
G Interpret An Option Adjusted Spread With Respect To A Nominal Spread And To Benchmark Interest Rates;
H Explain How Effective Duration And Effective Convexity Are Calculated Using The Binomial Model;
I Calculate The Value Of A Putable Bond, Using An Interest Rate Tree;
J Describe And Evaluate A Convertible Bond And Its Various Component Values;
K Compare The Risk Return Characteristics Of A Convertible Bond With The Risk Return Characteristics Of Ownership Of The Underlying Common Stock.