CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

A seven-year bond is selling for $89.78. The coupon is 7%, with payments being made semi-annually, and the market required yield is 9%. If the market-required yield drops to 8%, what will the amount of discount be?
A. $0.00
B. $4.94
C. $5.28
Explanation: N=14, I/Y=4, PMT=3.5, FV=100, PV=?=94.72, diff. = 100-94.72 = 5.28

User Contributed Comments 9

User Comment
shasha amount of discount: discount from FV!
ruvardha please some one help me understand how to compute this question through calculator (ti) Ba 11
rkrazib N=7x2=14; I/Y=8/2=4; PMT=7/2=3.5; FV=Par Value=100; CPT>PV=94.72. So, the amount of dscount=Par value-PV=100-94.72=5.28 :)
achu KEY: what will the amount of DISCOUNT be?- NOT "the change in bond price!"
StanleyMo good questions, very tricky
serboc trick question
reganbaha fool me once, shame on you, fool me twice, shame on me.
zeen1 took me five mins to find out my mistake.. good one...
reaganm1 The answer to this question is easy, but it caught me out.
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