I have been referring only the Schweser notes… and the Examples on Page 13 - 14 … seem to be wrong. http://www.schweser.com/news/notes_updates.php?show_book=Book%202 So is the COUPON… the “interest” income for TR securities … or is it the Beginning PV of the Bond x Yield at the time of issuance ? I need help ! (largely thanks to Schweser!)
coupon.
http://www.cfainstitute.org/cfaprogram/resources/Documents/level_II_errata.pdf COUPON IS NOT , the interest. Check the correction wrt PAGE 18 of Reading 21. It seems that you, Sir, are wrong. So was I. Open your eyes, the CFAI is human. Annoyingly human.
on held for trading? it should be the coupon. debt held for trading is marked to market every period, with gains or losses recognized through the I/S. Any coupon payments would be interest income.
I know but well the CFAI surely seems to think otherwise ! Did you go through the PDF file the link to which I have provided in my previous post ?
the pdf is some errata referring to some example in a text book - it doesnt tell me anything, unless someone posts the question. What is the actual calculation they are doing for the accrued interest? If you cant post the whole example, can you post the key points? I’m actually pretty curious about it
Yeah the details of the Bond in question are - Par Value- GBP 275,000 Carrying Value - GBP 300,000 Yield at the time of issuance- 6 % The error: for TR and AFS securities… the Interest income was written as “GBP 16,500” (Par value x 6%) they now seem to have corrected it to GBP 13, 500 (Carrying Value x 6%) I suggest you look into it deeper when you have access to your CFAI notes. ============================================================ On a completely different note: Now I just found out Minority interest is a part of Equity and the Consolidation method actually results in HIGHER EQUITY … thence ; Equity method and proportionate consolidation method give you the same Equity … but Consolidation method doesn’t. also the ROE for the 3 methods is no longer constant… ITS RAINING ERRATA !
that bond question has me confused, and i will look at it - does it say if the notes were issued at par, or issued at a discount/premium?
GBP 300,000 was paid for a Bond with a Par Value of GBP 275,000. That implies a bond issued at a Premium. And oh wait the COUPON Rate is 6 % The Yield at time of Issuance was 4.5 % … I’m sorry for ignoring that but of course our mistakes in comprehending the term “interest” subsist. It is still a surprising one.