SOA Exam FM Sample Question 136
Study guide: Exam FM-2
Bond X is a 20-year bond with annual coupons and the following characteristics:
- i) Par value is 1000.
- ii) The annual coupon rate is 10%.
- iii) Bond X is callable at par on any of the last five coupon dates.
Calculate the maximum purchase price for Bond X that will guarantee an annual effective yield rate of at least 5%.
- A) 1519
- B) 1542
- C) 1570
- D) 1596
- E) 1623
Answer this question and see the worked solution
Concepts tested
- Bond Price
- Bonds
- Yield Rate
- Face Value
- Coupon
- Coupon Rate
- Redemption Value
- Market Value
- Callable Bond