SOA Exam FM Sample Question 271
Study guide: Exam FM-2
Bond A and Bond B are each five-year 1000 face amount bonds. In addition:
- i) Bond A has an annual coupon rate of 5% paid semiannually.
- ii) Bond B has an annual coupon rate of 3% paid annually.
- iii) The price of Bond B is 100 less than the price of Bond A.
- iv) The annual effective yield rate for Bond A is 4%.
Calculate the annual effective yield rate for Bond B.
- A) 4.15%
- B) 4.20%
- C) 4.25%
- D) 4.30%
- E) 4.35%
Answer this question and see the worked solution