SOA Exam FM Sample Question 258
Study guide: Exam FM-2
Bond A is a 15-year 1000 face amount bond with an annual coupon rate of 9% paid semiannually. Bond A will be redeemed at 1200 and is bought to yield 8.4% convertible semiannually.
Bond B is an n-year 1000 face amount bond with an annual coupon rate of 8% paid quarterly. Bond B will be redeemed at 1376.69 and is bought to yield 8.4% convertible quarterly.
The two bonds have the same purchase price.
Calculate n.
- A) 12
- B) 14
- C) 15
- D) 16
- E) 18
Answer this question and see the worked solution