Question
At low yield levels, what convexity behavior makes callable bonds risky to analyze with straight-bond intuition?
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Answer
They can exhibit negative convexity.
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Question
What major risk remains for a repo lender even when collateral is posted?
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Answer
Collateral value may fall below the amount lent after borrower default.
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Question
What funding risk is created when a firm relies heavily on commercial paper?
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Answer
Rollover risk if maturing paper cannot be refinanced.
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Question
Why might an issuer choose medium-term notes instead of a traditional corporate bond issue?
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Answer
MTNs can be sold continuously from a shelf as investor demand appears.
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