- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 44. Introduction to Fixed-Income Valuation
- Subject 5. Yield Measures for Fixed-Rate Bonds
CFA Practice Question
What is the yield to first par call of a 20-year, 8.5% bond with a market price of $104.95, if the first par call date is in 15 years?
A. 7.93%
B. 8.20%
C. 8.50%
Explanation: N=30, PV = -104.95, PMT = 4.25, FV = 100, I/Y =?= 3.965, YTM = 3.965(2) = 7.93%
User Contributed Comments 4
| User | Comment |
|---|---|
| Joel1980 | We have to assume it's semi annual payments if not specified. |
| meeravenk | How can we just assume that the issuer will return 100 at first call!! |
| oregan | It's by definition that the issuer pays the face value. |
| birdperson | wording confused me, i assumed "first call date in 15 years" meant that there is 5 years left, hence N = 10... |