Conversions Priviledges - The Pristine Blog | The Pristine Blog

Embedded Options

Sunday, February 28th, 2010

Embedded Options It is common to grant issuers and bondholders an option to take an action against the other party regarding the owed money, either with the principal or the coupons. Such options have a significant effect on the behaviour of the bond price because of the potential modification of the cash flows that the action may cause. Although not explicitly priced in the market, the options carry implicit economic value and are reflected in the prices of the bonds. These options are known as embedded options.

Tags: accelerated sinking, call privisions, cfa exam, cfa exam 2010, cfa exam 2011, conversions priviledges, embedded options, embedded options call provisions the right to prepay a portion of the principal in excess of the scheduled principal repayment an accelerated sinking fund provision caps on a floating-rate bonds, floating rate, frm 2011, GARP, Pristine, Pristine Careers, pristinecareers, PRM, PRMIA, put provisions, put prvisions
Posted in Professional Risk Manager (PRM) | no comments

Avatars by Sterling Adventures

© Pristine 2011

Global Association of Risk Professionals, Inc. (GARP^TM) does not endorse, promote, review or warrant the accuracy of the products or services offered by Pristine for FRM^® related information, nor does it endorse any pass rates claimed by the provider. Further, GARP is not responsible for any fees or costs paid by the user to Pristine nor is GARP responsible for any fees or costs of any person or entity providing any services to Pristine Study Program. FRM^®, GARP^TMand Global Association of Risk Professionals^TM, are trademarks owned by the Global Association of Risk Professionals, Inc

CFA Institute does not endorse, promote, or warrant the accuracy or quality of the products or services offered by Pristine Careers. CFA Institute, CFA^®, and Chartered Financial Analyst^®; are trademarks owned by CFA Institute.