SOA Exam FM Sample Question 319
Study guide: Exam FM-2
You are given the following information about Bond A and Bond B:
- i) Bond A is a 20-year bond that has 10,000 face amount, an annual coupon rate of 7% payable semiannually, and has a redemption value that is 10% higher than its price. Bond A is bought to yield an annual nominal interest rate of 5% convertible semiannually.
- ii) Bond B is an
n-year bond with semiannual coupons and the same face amount, redemption value, coupon rate, and yield rate as Bond A. The price of Bond B is 158.33 less than the price of Bond A.
Calculate n.
- A) 12
- B) 17
- C) 24
- D) 36
- E) 48
Answer this question and see the worked solution