I just took the free mock from http://www.soleadea.com/cfa-level-1-mock-exam-1 and I dont understand why there is answer C in question 104 about spot rates. I do it this way: price=102,7/1.03^4+2.7/1.029^3+2.7/1.0255^2+2.7/1.024=98.93 answer B
and the good answer is C, why??
You also need to divide the spot rates by 2. Similar questions in CFA mock (pm paper)
You don’t even have to calculate, since the coupon is much higher than spot rates, the bond must trade at a premium to face value, C is the only alternative.
thank you guys for your help I have also problem with question 55. The correct answer is B, but I think it should be A. inventory sold is 17,000 Because it is LIFO method first 10.600 units from 2 september are sold and then 6,400 units from 5 may so there remains 2,100 units at $1.9 and 12,000 units at $2 it makes $27,990
the question on spot rates you did on that exam is easy…the one on the CFAI mock exam…you have 2 options where the value is above par and you have to select one…which means you have to calculate them and use up a good 3min on it (Q104 noon)
Gekko11 you are right the question on spot rates is easy if you remember rules for discount and premium bonds and if you apply them to this kind of questions But why the answer for question 55 is B?? could anybody explain it to me, please?
ok, I did it we should use LIFO and the perpetual inventory system so the dates of both purchase and sale are important