CFA Practice Question

There are 252 practice questions for this study session.

CFA Practice Question

What is the value of a 2-year, 6% coupon, putable bond given the following interest rate tree?

Correct Answer:

Current value of the bond at node 0 = [(100.000 + 6) / (1.038796) + (101.302 + 6) / (1.038796)] /2 = 102.668.

User Contributed Comments 5

User Comment
vi2009 take $100+6 instead of $99.755 since only exercisable if interest rate <6%
Allen88 Thanks vi2009, I missed that.
shajidubai The question has to specifically say the put price as 100.
ashish100 Got in on my own on the first try! :D Haters gonna hate. Ainters gonna aint..
ashish100 Call/put price is normally par value per reading
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