The Profit on Bond Call Options Moves Asymmetrically with Interest

question 23

True/False

The profit on bond call options moves asymmetrically with interest rates.

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Definitions:

Pitch Diameter

The diameter of an imaginary circle on a gear or screw, where the width of the gear tooth and the space between teeth are equal.

Reciprocating Motion

A type of mechanical motion where an object moves back and forth along a straight path, common in pistons and pumps.

Linear Motion

Motion in a straight line and in one direction, characterized by a constant velocity unless acted upon by external forces.

Pitch Diameter

A critical dimension in thread measurement; it's the diameter of the imaginary cylinder where the thread depth equals half the pitch.