- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 44. Introduction to Fixed-Income Valuation
- Subject 1. Bond Prices and the Time Value of Money

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**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

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**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 |