SOA Exam FM Sample Question 139
Study guide: Exam FM-2
Claire purchases an eight-year callable bond with a 10% annual coupon rate payable semiannually. The bond has a face value of 3000 and a redemption value of 2800.
The purchase price assumes the bond is called at the end of the fourth year for 2900, and provides an annual effective yield of 10.0%.
Immediately after the first coupon payment is received, the bond is called for 2960. Claire's annual effective yield rate is i.
Calculate i.
- A) 9.8%
- B) 10.1%
- C) 10.8%
- D) 11.1%
- E) 11.8%
Answer this question and see the worked solution
Concepts tested
- Bond Price
- Callable Bond
- Bonds
- Yield Rate
- Face Value
- Coupon
- Coupon Rate
- Redemption Value
- Market Value