- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 37. Economics and Investment Markets
- Subject 3. The Yield Curve and the Business Cycle
CFA Practice Question
The real risk-free rate is 0.75%. Average inflation over the next year is 2%. Investors require 1.5% for future inflation uncertainty. What would be the price of a default-free bond with a face value of $1,000 and one full year to maturity?
B. $973
C. $959
A. $988
B. $973
C. $959
Correct Answer: C
1,000/(1 + 0.75% + 2% + 1.5%) = 959
User Contributed Comments 1
| User | Comment |
|---|---|
| davidt87 | feel like its worth stating that it's a zero-coupon bond |