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Mastering Python for Finance - Second Edition
book

Mastering Python for Finance - Second Edition

by James Ma Weiming
April 2019
Intermediate to advanced
426 pages
11h 13m
English
Packt Publishing
Content preview from Mastering Python for Finance - Second Edition

Bond options

When bond issuers, such as corporations, issue bonds, one of the risks they face is the interest rate risk. When interest rates decrease, bond prices increase. While existing bondholders will find their bonds more valuable, bond issuers, on the other hand, find themselves in a losing position, since they will be issuing higher-interest payments than the prevailing interest rate. Conversely, when interest rates increase, bond issuers are at an advantage, since they are able to continue issuing the same low-interest payments as agreed to on the bond-contract specifications.

To capitalize on interest-rate changes, bond issuers may embed options within a bond. This allows the issuer the right, but not the obligation, to buy or sell ...

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Publisher Resources

ISBN: 9781789346466