medium · Debt Capital Markets bond-instruments-structures

An analyst calculates that a 100 bp drop in rates would cause a bullet bond's price to rise by 8.5%. For a callable version of the same bond trading at a premium, the price rise would likely be:

1. Less than 8.5%
2. Exactly 8.5%
3. More than 8.5%
4. A price decrease, due to the call becoming active.

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