Browse CFA Level 2

Chapter 10: Bonds with Embedded Options—Introduction

In this section

  • Callable and Putable Bonds
    Explore how embedded call and put features alter bond risk, valuation, and payoff structures, giving issuers and investors unique advantages in shifting interest rate environments.
  • Valuing Straight Bonds vs. Embedded-Option Bonds
    Discover how to value traditional bonds versus those with embedded call and put provisions, exploring discounted cash flow techniques and risk-neutral frameworks to handle changing cash flow structures.
  • Impact of Interest Rate Volatility on Options
    Explore how changing interest rate volatility affects callable and putable bonds, focusing on embedded option value, duration, and convexity.
  • Practice Vignette: Identifying Option Value
    Advanced insights on decomposing embedded-option bond pricing, scenario analysis, and volatility’s impact on callable and putable bonds.
View the page source Edit the page History
Saturday, June 28, 2025 Monday, January 1, 1

Important Notice: FinancialAnalystGuide.com provides supplemental CFA study materials, including mock exams, sample exam questions, and other practice resources to aid your exam preparation. These resources are not affiliated with or endorsed by the CFA Institute. CFA® and Chartered Financial Analyst® are registered trademarks owned exclusively by CFA Institute. Our content is independent, and we do not guarantee exam success. CFA Institute does not endorse, promote, or warrant the accuracy or quality of our products.

Chapter 9: Monte Carlo Simulation for Fixed Income
Chapter 11: Analyzing Callable and Putable Bonds