SOA Exam FM Sample Question 440
Study guide: Exam FM-2
David purchases a level perpetuity-due, which provides annual payments of 1 and is priced to yield an annual effective rate of 6.25%.
Immediately before the second payment, the annual effective yield rate is 5.75%, and the price is estimated to be X using the first-order modified approximation. The actual price of the perpetuity at this time is Y.
Calculate \dfrac{X-Y}{Y}.
- A)
-0.76\% - B)
-0.64\% - C)
-0.61\% - D)
-0.32\% - E)
-0.17\%
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