- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 44. Introduction to Fixed-Income Valuation
- Subject 3. Flat Price, Accrued Interest, and the Full Price

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**CFA Practice Question**

The bond described below is sold for settlement on August 25, 2026.

Coupon payment dates (semi-annual payments): Mar 15 and September 15

Maturity date: September 15, 2030

Day count convention: 30/360

Annual yield-to-maturity: 5%

Annual coupon rate: 6%

Coupon payment dates (semi-annual payments): Mar 15 and September 15

Maturity date: September 15, 2030

Day count convention: 30/360

Annual yield-to-maturity: 5%

The full price the bond will settle at on August 25, 2026 is ______.

Correct Answer: 106.30

According to the 30/360 day-count convention, there are 160 days between the last coupon on March 15, and the settlement date on August 25. At the beginning of the period, there are nine semi-annual periods to maturity.

PV = 3/1.025

^{1}+ 3/1.025^{2}+ ... + 103/1.025^{9}= 103.99. Full price on August 25 = 103.99 x (1.025)^{160/180}= 106.30###
**User Contributed Comments**
9

User |
Comment |
---|---|

pranubal |
Is there any easy way to solve the above questions or ? |

HolzGe1 |
It is easy: 1) Calculate PV as per coupon date Mar 15 via calculator: N=9, I/Y=5/2=2.5, FV=100, PMT=3%*100=3, PV=?=103.99 2) Add Accrued Interest to arrive at the full price on Aug 25: 103.99 * (1 + 2.5%)^(160/180) |

farhan92 |
I have a feeling i'll mess up the t/T bit in the exam |

dlackie |
Why are we using YTM to calculate accrued interest? |

merc5559 |
Same question as dlackie. I solved using coupon since that is related to the interest payment... |

khalifa92 |
you're not calculating the accrued interest using I/Y, you're calculating the full price using I/Y and the time of accrued interest: full price = clean + (r^(t/T)) AI= t/T * PMT |

deleeuw |
why doesnt N=8? Next payment Sept 2026 (1), March 27 (2), Sept 27 (3) March 28 (4) Sept 28 (5) March 29 (6) Sept 29 (7) March 30 (8).... |

MathLoser |
Bruh, why don't you count the Sep 30 (9) BTW, this can be solved in like 10 seconds by using the [BOND] button on your calculator. |

walterli |
@deleeuw read the note, the PV of the bond on last coupon payment date uses 9 periods of semi-annual basis. (Includes March 15th,2026) and use this value to calculate FV on settlement date. |