CFA Practice Question

There are 490 practice questions for this study session.

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

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
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