CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

An 8% coupon bond with a par value of $100 matures in two years and is selling at $98.24 to yield 9%. Exactly one year ago this bond sold at a price of $95.03 to yield 10%. The bond pays annual interest. The change in price attributable to the change in maturity is closest to ______.
A. $1.08
B. $1.50
C. $2.21
Explanation: The price of the bond one year ago was $95.03 to yield 10%. If the yield stays at 10%, the price of the bond today is: 8/1.10 + 108/1.102 = 96.53. The change in price attributable to moving to maturity = $96.53 - $95.03 = $1.50.

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