Fixed Income CFA Level 1 Question

CFA Level I Fixed Income
#1

Q: A bond would receive $6 every six months for the next 2 years and $100 (face value) at the end of these 2 years as the redemption value. What would be its price, if the market yield has increased by 100 bps after its coupon was decided (when it was issued at par)? Answer options: a. $101.25 b. $98.29 c. $98.95 d. $99.45

Kindly help to calculate.

#2

Simple TVM

98.29

FV = 100
N = 4
I/Y = 6.5
PMT = 6
CPT PV = 98.29

#3

:+1:

Herb likely has P/Y=C/Y=1. If you set P/Y=C/Y=2, then I/Y must be set to 13. Either way, you get 98.29.

#4

thanks a lot HerbsDelite. :+1: