- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 6. Fixed-Income Bond Valuation: Prices and Yields
- Subject 3. Relationships between Bond Price and Bond Characteristics
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
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. |