- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 44. Introduction to Fixed-Income Valuation
- Subject 3. Flat Price, Accrued Interest, and the Full Price

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**CFA Practice Question**

Assume that two months have elapsed since the last coupon payment date. The cum-coupon price of $1,000,000 par value for a 10-year bond paying 6 1/2% coupon interest in semi-annual payments is $1,011,325. What is the full price?

A. $1,060,075

B. $1,043,825

C. $1,022,158

**Explanation:**The clean price is $1,011,325.

The accrued interest is (2/6) x (1/2) x (6.5%) x $1,000,000 = $10,833.

The full price = $1,011,325 + $10,833 = $1,022,158

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**User Contributed Comments**
3

User |
Comment |
---|---|

mtcfa |
Important note: the text has a much complex method to determine full price. |

poomie83 |
Does it arrive at the same answer as above? |

farhan92 |
i've seen two formulas being used for AI 1) t/T * PMT and 2) PMT ^t/T |