CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

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

A. $39.37
B. $40.39
C. $89.29
Correct Answer: A

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

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.
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