Chartered Financial Analyst Level 2
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32 In the arbitrage-free valuation framework for a bond with embedded options, the sum of the arbitrage-free value of the option-free bond and the arbitrage-free value of each of the options is:
32 In the arbitrage-free valuation framework for a bond with embedded options, the sum of the arbitrage-free value of the option-free bond and the arbitrage-free value of each of the options is:
Exam-Like
A
less than the value of the option-embedded bond.
B
equal to the value of the option-embedded bond.
C
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