- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 2. Time Value of Money in Finance
- Subject 2. Fixed Income Instruments and the Time Value of Money
CFA Practice Question
Consider a bond that pays 10% semi-annually and has six years to maturity. The market requires an interest rate of 12% on bonds of this risk level. What is this bond's price?
A. $91.62
B. $91.77
C. $95.08
Explanation: N=12, I/Y=6, PMT=5, FV=100, PV=?=91.62
User Contributed Comments 4
| User | Comment |
|---|---|
| jasminameron | The interests are compounded semiannualy, aren't they? |
| kellyyang | yep! |
| bidisha | Why is pmt 5 if it says pmt is made semi anually. Shouldn't it be 10 |
| sevywonder | @bidisha 10%/2 = 5 |