Fixed income valuation

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Fixed income valuation

Postby bhuyanpk » Sat Nov 28, 2015 7:19 am

Can anyone explain me the relation among a callable,putable and option free bond with respect to spreads.I mean which has larger spread and which follows next with reason

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Re: Fixed income valuation

Postby edupristine » Fri Dec 04, 2015 1:21 pm

Price of the putable bond is higher that the price of option free bonds and yield is lower. That's why it will have -ve spread.
In case of callable bond, price is lower and yield is higher as compared to straight bonds so it will have +ve spread.

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