单选题
If interest rates fall, the: A. callable bond's price rises faster than that of a noncallable but otherwise identical bond. B. callable bond's price rises more slowly than that of a noncallable but otherwise identical bond. C. value of call option embedded in the callable bond fails.
【正确答案】
B
【答案解析】When a callable bond's yield falls to a certain point, the price will increase at a decreasing rate as the yields continue to fall. Compare this to a noncallable bond where, as the yield falls the price rises at an increasing rate.