- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 44. Introduction to Fixed-Income Valuation
- Subject 2. Relationships between Bond Price and Bond Characteristics

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**CFA Practice Question**

A bond is currently selling for $91.42. It is a 7% coupon bond, with payments made semi-annually, yielding 8.5% with eight years remaining to maturity. If yields were to increase by 1.5% immediately, what would this bond sell for?

A. $83.74

B. $100

C. $101.74

**Explanation:**N=16, I/Y=5, PMT=3.5, FV=100, PV=?= 83.74

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**User Contributed Comments**
2

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

jgraham6 |
no need to calculate on this one. because yields increase, therefore price of bond must decrease. A is the only option with a lower price. thus, process of elimination rules out the other possibilities. save 60 valuable seconds on the exam. |

dipu617 |
good observation jgraham. :-) |