Why should I choose AnalystNotes?

AnalystNotes specializes in helping candidates pass. Period.

Find out more
Subject 4. Matrix Pricing PDF Download
Most bonds don't trade on a daily basis. Usually only the most recent large issues have the greatest liquidity and pricing ability. There is rarely a consensus on the exact value of an individual bond.

Matrix pricing is the practice of interpolating among values for similar instruments arranged in a matrix format.

  • It attempts to categorize bonds with similar features (e.g., type of issuer, credit rating, coupon, maturity, etc.) and apply a general yield level to the entire category of bonds. Typically a required yield over the benchmark rate is estimated.
  • It then calculates the approximate price of a specific bond within a category using the derived yield level.
  • It represents an educated guess and not an actual offer or trade price.

Learning Outcome Statements

e. describe matrix pricing;

CFA® Level I Curriculum, 2020, Volume 5, Reading 44

User Contributed Comments 0

You need to log in first to add your comment.
I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
Edward Liu

Edward Liu

My Own Flashcard

No flashcard found. Add a private flashcard for the subject.

Add

Actions