CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

What is the estimated new price of a semi-annual-pay 9%, 15-year bond with an 8.5% yield if rates decrease by 25 basis points?

A. 58.76
B. 104.19
C. 106.39
Correct Answer: C

New Price = 106.39. PMT=4.5, FV=100, N=30, I/YR=8.25/2=4.125

User Contributed Comments 8

User Comment
sivenkova Why 8,25? In the task it is stated as 8,5? Is it a mistake?
alki yield decreases 25 bps to 8.25
Oarona Thanks Alki. Good observation
jonan203 dude, this question is like one sentence long and you missed "rates decrease 25 basis points"?
praj24 how did you know.... FV = 100?
ocshing praj24 I just tried with par value of 1000 and I get PV=1063.87..you can't simply go wrong whether you have chosen FV=100 or 1000
ascruggs92 praj24, please, for your own good, read the notes.
khalifa92 guys always read slowly and try to understand the question properly because trying to solve fast and move on
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