- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 44. Introduction to Fixed-Income Valuation
- Subject 2. Relationships between Bond Price and Bond Characteristics
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
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. :-) |