- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 44. Introduction to Fixed-Income Valuation
- Subject 2. Relationships between Bond Price and Bond Characteristics

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**CFA Practice Question**

What is the value of a zero-coupon bond that has eight years to maturity and a required yield of 12%?

B. $40.39

C. $89.29

A. $39.37

B. $40.39

C. $89.29

Correct Answer: A

N=16, I/Y=6, PMT=0, FV=100, PV=?=39.37

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**User Contributed Comments**
14

User |
Comment |
---|---|

wldu |
Can you always assume that FV=100? |

tomchen |
yes,you can always assume Fv=100, or Fv=1000, up to question |

Farina |
I think you'll find, because the typical par of most bonds is $1000, that the CFA exams will expect you to assume this is if it's not stated explicitly in the question. Shouldn't be too confusing though, just a decimal place error. |

jwebbs |
i got it right, so i guess you just always assume semi annual unless specified? |

6YASHWIN |
are all 0 coupan bonds semi-anually calculated |

DonAnd |
YES!!!! |

2014 |
always compute pv for fast: 100/1.06 ^ 16 = 39.37 always pv for zero coupen bonds |

johntan1979 |
$39.3646 |

farhan92 |
$39.36462837 |

KareemSa |
Why should it be semi-annually calculated, even the interests are paid at maturity? |

john6668 |
^ same question as KareemSa, why semiannual on zero coupons...? |

xp_acctant |
Same question as KareemSa and John6668. Why semiannual on Zero Coupon ? |

MathLoser |
Same question as KareemSa, john6668, and xp_acctant. Why semiannual on zero-coupon bond? |

applelee |
zero-coupon bond prices are typically using semi-annual periods and trade at deep discount. |