3. Properties of Bond Duration
e. explain how a bond's maturity, coupon, and yield level affect its interest rate risk;
What kind of convexity does a callable bond exhibit at different yield levels?
A callable bond exhibits positive convexity at high yield levels and negative convexity at low yield levels.
What is the difference in value between a putable bond and an option-free bond?
The difference between the value of a putable bond and the value of an otherwise comparable option-free bond is the value of the embedded put option.