CFA Practice Question

There are 490 practice questions for this study session.

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...
You need to log in first to add your comment.