- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 44. Introduction to Fixed-Income Valuation
- Subject 5. Yield Measures for Fixed-Rate Bonds

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**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%

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**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... |