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Identify the rule, formula, or decision criterion before reading the answer choices. CFA Level I distractors often use the right vocabulary with the wrong condition.
Fixed Income
6. Fixed-Income Bond Valuation: Prices and Yields practice questions
6. Fixed-Income Bond Valuation: Prices and Yields is part of CFA Level I Fixed Income. Fixed Income questions focus on bond cash flows, yield measures, duration, convexity, credit risk, securitization, and curve interpretation. Use this page to review the controlling ideas, then work through 9 questions with answer explanations and common traps.
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Fixed Income
6. Fixed-Income Bond Valuation: Prices and Yields
A 5-year annual-pay bond has a 4.0% coupon, a yield to maturity of 5.0%, and a par value of 1,000. The bond's price is closest to:
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6. Fixed-Income Bond Valuation: Prices and Yields
A semiannual-pay bond has a 6.0% annual coupon and a full price of 101.20 per 100 of par. The last coupon was paid two months ago, and the next coupon will be paid four months from now. Using a straight-line accrual convention, the bond's flat price per 100 of par is closest to:
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6. Fixed-Income Bond Valuation: Prices and Yields
A fixed-rate bond with a coupon rate below its yield to maturity is most likely trading:
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6. Fixed-Income Bond Valuation: Prices and Yields
An analyst estimates the required yield on an illiquid 4-year A-rated utility bond by interpolating yields from actively traded 3-year and 5-year A-rated utility bonds. The analyst's method is best described as:
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6. Fixed-Income Bond Valuation: Prices and Yields
A fixed-rate bond with a coupon rate below its yield-to-maturity will most likely trade at:
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6. Fixed-Income Bond Valuation: Prices and Yields
For a premium fixed-rate bond with no change in yield-to-maturity, the price as maturity approaches is most likely to:
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6. Fixed-Income Bond Valuation: Prices and Yields
A five-year, 6% annual coupon bond pays semiannually and has a yield-to-maturity of 7%. Per 100 of par, its price is closest to:
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6. Fixed-Income Bond Valuation: Prices and Yields
A semiannual-pay bond has a coupon rate of 6% and 183 days in the coupon period. Settlement occurs 73 days after the last coupon date. Accrued interest per 100 of par is closest to:
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6. Fixed-Income Bond Valuation: Prices and Yields
A bond's full price is 101.20, accrued interest is 1.65, and par value is 100. The clean price is closest to:
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