Duration of a callable zero bond

Discussion in 'P2.T5. Market Risk (25%)' started by Hend Abuenein, Apr 27, 2012.

  1. Hend Abuenein

    Hend Abuenein Active Member

    Hi Aleksander: My post #19 was @David, we wrote simultaneously you and I.

    The same problem with the same dimensions exists everywhere.

    Thank you.
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  2. Aleksander Hansen

    Aleksander Hansen Well-Known Member

    Good luck Hend!
    I hope everything works out - and for someone as hard-working as yourself, it tends to do - even if things can be tight or difficult at times.
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  3. Hend Abuenein

    Hend Abuenein Active Member

    Thank you for sharing that Aleksander :)
    Much appreciated the chin ups :)
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  4. rony_frm

    rony_frm New Member

    An issuer will call a ZCB only if the interest rates become zero or negative. I mean forget bond rates, equations etc for a moment. What does calling a ZCB mean. lets day its a 10 year bond and after 6 years Iam analysing at it. if I have to pay my bond holder 100$ 4 years from now, will will I call the bond and pay them 100 now??? I can keep that 100 in bank and earn interest for next 4 years. I will call only if I cannot earn interest or If I have to pay the bank for keeping the money.( UBS did it in 2011 in switzerland for some types of deposit accounts).
    Otherwise no point in calling the bond now.

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