A purchaser of a bond call option gains if interest rates fall.

Name: A purchaser of a bond call option gains if interest rates fall.
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Question

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A bond call option gives the purchaser the right to buy a bond at a certain price, known as the strike price. If interest rates fall, the market value of the bond increases and the purchaser can sell the bond at a higher price than the strike price, thus making a profit. Therefore, the purchaser gains if interest rates fall.

A Purchaser of a Bond Call Option Gains If Interest