问题
单项选择题
For a decline in interest rates, the price of a callable bond, when compared to an otherwise identical option-free bond, will most likely rise by:（）
A. less because the price of the embedded option rises.
B. less because the price of the embedded option falls.
C. more because the price of the embedded option rises.
答案
参考答案：A
解析：
As interest rates decline, the price of the option-free bond rises. However, the price Of the embedded call option also rises. Consequently, the price of a callable bond rises by less than the price of an otherwise identical option-free bond.