SOA Exam FM Sample Question 141
Study guide: Exam FM-2
Bond A and Bond B are both annual coupon, five-year, 10,000 par value bonds bought to yield an annual effective rate of 4%.
i) Bond A has an annual coupon rate of r\%, a redemption value that is 10% below par, and a price of P.
ii) Bond B has an annual coupon rate of (r+1)\%, a redemption value that is 10% above par, and a price of 1.2P.
Calculate r\%.
- A) 5.85%
- B) 6.85%
- C) 7.85%
- D) 8.85%
- E) 9.85%
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