- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 44. Introduction to Fixed-Income Valuation
- Subject 2. Relationships between Bond Price and Bond Characteristics

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**CFA Practice Question**

You have a bond with six years to maturity. The bond pays 10% coupons semi-annually, but the market demands a 12% return. If the market rate stays constant, what is the price path for years zero, two, four, and six?

A. $87.61; 90.06; 93.93; 98.21

B. $91.62; 93.79; 96.53; 100

C. $91.78; 93.93; 96.62; 100

**Explanation:**N=12, I/Y=6, PMT=5, FV=100, PV=?=91.62; N=8, PV=93.79; N=4, PV= 96.53; N=0, PV =100

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**User Contributed Comments**
5

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

PedroEdmundo |
U don't really have to calculate if u notice that B is at premium and A doesn't end with the face value. |

myanmar |
yes pedroedmundo, that's the only way to survive the examination |

labsbamb |
U have to calculate for n=0 n=2 n=4 n=6 PV? |

smiley25 |
looks like a discount bond to me. C=10% Y=12%, calc n=6 and decide from there. |

octavianus |
B sells at a discount |