SOA Exam FM Sample Question 266

Study guide: Exam FM-2

Let $P(0,t)$ be the current price of a zero-coupon bond that will pay 1 at time $t$ .

Let $X$ be the value at time $n$ of an investment of 1 made at time $m$ , where $m < n$ .

Assume all investments earn the same interest rate.

Determine $X$ .

A) $\dfrac{P(0,m)}{P(0,n)}-1$
B) $\dfrac{P(0,n)}{P(0,m)}+1$
C) $\dfrac{P(0,m)}{P(0,n)}+1$
D) $\dfrac{P(0,m)}{P(0,n)}$
E) $\dfrac{P(0,n)}{P(0,m)}$

Concepts tested