- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 6. Fixed-Income Bond Valuation: Prices and Yields
- Subject 2. Flat Price, Accrued Interest, and the Full Price
CFA Practice Question
The bond described below is sold for settlement on August 25, 2026.
Coupon payment dates (semi-annual payments): Mar 15 and September 15
Maturity date: September 15, 2030
Day count convention: 30/360
Annual yield-to-maturity: 5%
Annual coupon rate: 6%
Coupon payment dates (semi-annual payments): Mar 15 and September 15
Maturity date: September 15, 2030
Day count convention: 30/360
Annual yield-to-maturity: 5%
The full price the bond will settle at on August 25, 2026 is ______.
Correct Answer: 106.30
According to the 30/360 day-count convention, there are 160 days between the last coupon on March 15, and the settlement date on August 25. At the beginning of the period, there are nine semi-annual periods to maturity.
PV = 3/1.0251 + 3/1.0252 + ... + 103/1.0259 = 103.99. Full price on August 25 = 103.99 x (1.025)160/180 = 106.30
User Contributed Comments 9
| User | Comment |
|---|---|
| pranubal | Is there any easy way to solve the above questions or ? |
| HolzGe1 | It is easy: 1) Calculate PV as per coupon date Mar 15 via calculator: N=9, I/Y=5/2=2.5, FV=100, PMT=3%*100=3, PV=?=103.99 2) Add Accrued Interest to arrive at the full price on Aug 25: 103.99 * (1 + 2.5%)^(160/180) |
| farhan92 | I have a feeling i'll mess up the t/T bit in the exam |
| dlackie | Why are we using YTM to calculate accrued interest? |
| merc5559 | Same question as dlackie. I solved using coupon since that is related to the interest payment... |
| khalifa92 | you're not calculating the accrued interest using I/Y, you're calculating the full price using I/Y and the time of accrued interest: full price = clean + (r^(t/T)) AI= t/T * PMT |
| deleeuw | why doesnt N=8? Next payment Sept 2026 (1), March 27 (2), Sept 27 (3) March 28 (4) Sept 28 (5) March 29 (6) Sept 29 (7) March 30 (8).... |
| MathLoser | Bruh, why don't you count the Sep 30 (9) BTW, this can be solved in like 10 seconds by using the [BOND] button on your calculator. |
| walterli | @deleeuw read the note, the PV of the bond on last coupon payment date uses 9 periods of semi-annual basis. (Includes March 15th,2026) and use this value to calculate FV on settlement date. |