Vol 1 Schweser Practice 2008 Exam 1 Afternoon Session (pp 50)

CFA Level III
#1

Got a bit stuck here, hope some expert can help. This is the 2008 Schweser Exam Practice Volume 1. Q13. Daniel Castillo and Ramon Diaz. Q13.1. Answer is B. But how to get the BEY of -2.56%? Q13.4. Answer is D. And how to work out this duration of 9.9?

#2
  1. Price of bond in one year: N = 19 ¡Á 2 = 38 PMT = 7 / 2 = 3.5 I/Y = 8/2 = 4 FV = 100 CPT ¡ú PV = ¨C90.32 Value of coupons at end of one year: N = 1 ¡Á 2 = 2 PMT = 7/2 = 3.5 I/Y = 8/2 = 4 PV = 0 CPT ¡ú FV = ¨C7.14 The semiannual return is the rate of return between today and the accumulated value one year from now: N = 2 PMT = 0 PV = ¨C100 FV = (90.32 + 7.14) = 97.46 CPT ¡ú I/Y = ¨C1.28% The bond equivalent yield is ¨C1.28% ¡Á 2 = ¨C2.56%.
#3

Thanks budfox427, really appreciate it!