单项选择题

How does the price-yield relationship for a callable bond compare to the same relationship for an option-free bond The price-yield relationship is:（）

A. concave for low yields for the callable bond and always convex for the option-free bond.
B. concave for an option-free bond and convex for a callable bond.
C. concave for the callable bond and convex for an option-free bond.

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单项选择题For which of the following securities is estimating the future cash flows least difficult（）

A. 5-year, 6% bond with two years of call protection.
B. 3-year note with a coupon of Libor + 100 basis points.
C. 8% preferred stock with mandatory redemption in five years.

单项选择题Magmyre Investments, Ltd. , hold two bonds: a callable bond issued by Mudd Manufacturing Inc. and a put-able bond issued by Precarious Builders. Both bonds have option adjusted spreads (OAS) of 135 basis points (bp). Kevin Grisly, a junior analyst at the firm, makes the following statements (each statement is independent). Apparently, Grisly could benefit from a CFA review course, because the only statement that could be accurate is:（）

A. Given a nominal spread for Precarious Builders of 110 bp, the option cost is -25 bp.
B. The cost of the call option on the Mudd bond is - 15bp.
C. The spread over the spot rates for a Treasury security similar to Mudd’s bond is 145 bp.