CFA Practice Question

There are 252 practice questions for this study session.

CFA Practice Question

Bob buys a bond with a death put for $1,000. It matures in 10 years and pays a 5% coupon each year. Par value is $1,000. If Bob dies in year 2, while interest rates have fallen to 3% and the bond is now trading at $1,100, how much will Bob's estate get from the bond?
A. $1,000
B. $1,100
C. not enough information
Explanation: Bob's estate can sell the bond on the open market for $1,100. The estate benefits from the decline in interest rates, just like if the bond did not have a death put.

User Contributed Comments 1

User Comment
darbyland death put does not matter here
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