单选题 Consider the following two statements about putable bonds: Statement 1: As yields rise, the price of putable bonds will fall less quickly than similar option-free bonds (beyond a critical point) due to the increase in value of the embedded put option. Statement 2: As yields fall, the price of putable bonds will rise more quickly than similar option-free bonds (beyond a critical point) due to the increase in value of the embedded put option. Are these statements correct or incorrect? A. Statement 1 is correct and Statement 2 is incorrect. B. Both statements are incorrect. C. Statement 1 is incorrect and Statement 2 is correct.

【正确答案】 A

【答案解析】Only statement 1 is true. As yields rise, the value of the embedded put option in a putable bond increases and (beyond a critical point) reduces the decline in the value of the bond compared to a similar option-free bond. As yields fall, the value of the embedded put option decreases and ( beyond a critical point) the putable bond behaves much the same as a similar option-free bond since the embedded put option has little or no value.