# Mock exam 2012 PM - Q34 Fixed-income

The question asks for total return calculation

given begining value 103 , ending value 102.5 , coupon 5% paid semi-annual and reinvest at 2% rate per year

so i thought = [(102.5-103) + 2.5 + 2.5(1.01)] / 103 = 0.044

but the answer said we have to make [(1.044)^ 0.5] *2 (i think they try to make the answer into “Bond equivalent yield form”)

can you explain me why ? and when we have to do ?

Bond returns are always given as BEY.

Always. (Unless they specifically tell you to do otherwise; e.g., they tell you to calculate the holding period return.)

i think the idea of BEY has been integrated in your calculation, which means the result return should be on a holding period base (semi-annual), so you need to annulized it back to get the annual return.

oh ok i got it , so total return of all bond (if they are not specified in other term) hv to be in BEY thanks a lot

My pleasure.

Where are you getting the 2012 pm mock? Can’t find anywhere please share!

You have to be one of the lucky ducks that failed in 2012. CFAI doesn’t provide past mock exams.

hey…Please can u share the link or email me mock 2012 and 2011…