- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 6. Fixed-Income Bond Valuation: Prices and Yields
- Subject 3. Relationships between Bond Price and Bond Characteristics
CFA Practice Question
If the required return on a bond does not change from year to year, then ______ over the same period if you ignore changes in default risk.
B. the price of a convertible bond will rise
C. the price of a bond selling at par will remain unchanged
D. the price of a perpetual bond will rise
E. the price of a premium bond will rise
A. the price of a discount bond will fall
B. the price of a convertible bond will rise
C. the price of a bond selling at par will remain unchanged
D. the price of a perpetual bond will rise
E. the price of a premium bond will rise
Correct Answer: C
User Contributed Comments 6
| User | Comment |
|---|---|
| todolist | if expected rate of return is unchanged, nothing will change with the bond |
| dah62 | None of the variables will change but the price will unless everything balances as is the case with selling at par.... |
| jpducros | Why not B ? Hasn't a convertible option value an inverse relationship with time to maturity ? |
| johntan1979 | Convertible = benefit investor = selling price higher (premium) Price will fall until par |
| Kevdharr | Price of a bond gradually moves closer to par as maturity approaches. If a bond is already selling at par, it will remain at par all other things held constant. |
| farhan92 | "pull to par" |