CFA Practice Question

There are 136 practice questions for this study session.

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?

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
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