medium · Debt Capital Markets
In a 'yield-to-worst' framework, if a bond has a put option at 100.00 in 3 years and it currently trades at 98.00, how does the put affect the YTW?
- The put option is treated like a call option by the issuer.
- The put does not affect YTW because it represents an improvement in yield.
- The yield to put becomes the YTW because it is the shortest duration.
- The YTW is the average of YTM and Yield to Put.
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