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Which callable bonds will be more expensive

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Reference no: EM132701706

Problem 1. Which of the following instruments is the most similar to a warrant?

a) Lockup period.

b) Green shoe provision.

c) Covenant.

d) Put option.

Problem 2. Firm GG is based on island G where interest rates do not change. Firm HH, however, is located in island H where interest rates change. Otherwise, firms and islands are identical. In particular, both firms have issued callable bonds with the same characteristics. If there is absolutely no connection between islands, which callable bonds will be more expensive?

a) Both bonds have the same price.

b) Those issued by Firm HH.

c) Those issued by Firm GG.

Reference no: EM132701706

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