SOA Exam FM Sample Question 248
Study guide: Exam FM-2
Kate buys a five-year 1000 face amount bond today with a 100 discount. The annual nominal coupon rate is 5% convertible semiannually.
One year later, Wallace buys a four-year bond. It has the same face amount and coupon values as Kate's and is priced to yield an annual nominal interest rate of 10% convertible semiannually. The discount on Wallace's bond is D.
The book value of Kate's bond at the time Wallace buys his bond is B.
Calculate B - D.
- A) 724
- B) 738
- C) 756
- D) 838
- E) 917
Answer this question and see the worked solution