Schweser Mock #44, #45

CFA Level II
#1

What is this formula they are using to price the bond? I haven’t seen this before.

#2
  1. for 44 it is a 2 year bond. 2. based on that and the Put option - price = 99.946 for 45 it is a little more convoluted find the Non-callable bond price -> 99.720 -> based on 100 par, 2 years, annual pay, coupon=5% -> YTM=5.15% (Bond function on calc). now find callable bond price -> 99.584 find ytm again -> 5.22% find difference between ytm = 0.07%
#3

cpk123 Wrote: ------------------------------------------------------- > 1. for 44 it is a 2 year bond. > 2. based on that and the Put option - price = > 99.946 > > for 45 > it is a little more convoluted > find the Non-callable bond price -> 99.720 -> > based on 100 par, 2 years, annual pay, coupon=5% > -> YTM=5.15% (Bond function on calc). > > now find callable bond price -> 99.584 > find ytm again -> 5.22% > > find difference between ytm = 0.07% For the putable bond, I used the tree and got a value of 100.985. Why is this the wrong approach?

#4

it is a 2 year bond they are talking about… so all the extra periods were meaningless. tree approach works, but from period 2 only. same for 45 as well.