SOA Exam FM Sample Question 273
Study guide: Exam FM-2
An investor purchases a 20-year, 1000 face amount bond with semiannual coupons at a price equal to the redemption value of 900. The bond yields an annual nominal rate of 10% convertible semiannually.
After ten years, the investor sells the bond, yielding to the buyer an annual nominal rate of 8% convertible semiannually. The investor uses the proceeds to purchase a 10-year, 1000 face amount bond with redemption value 1100 and semiannual coupons. The yield rate on the new bond is an annual nominal rate of 8% convertible semiannually.
Calculate the semiannual coupon payment for the new bond.
- A) 34
- B) 38
- C) 41
- D) 45
- E) 50
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