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Basic Question 5 of 19
The arbitrage-free valuation approach is different from traditional valuation because ______
II. the bond is broken into zero-coupon bonds and discounted by multiple spot rates.
III. spot rates are estimated for each cash flow maturity.
I. the bond is broken into zero-coupon bonds and a single bond rate is used.
II. the bond is broken into zero-coupon bonds and discounted by multiple spot rates.
III. spot rates are estimated for each cash flow maturity.
User Contributed Comments 3
| User | Comment |
|---|---|
| Luminos | These basic questions are great to determine whether one understands a conept. The multiple answers did unnerve me at first but will be beneficial. |
| Qoqi | Quick way to review the theory too |
| ldfrench | ^^Agree with Luminos |
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Martin Rockenfeldt
Learning Outcome Statements
identify the relationships among a bond's price, coupon rate, maturity, and yield-to-maturity
CFA® 2024 Level I Curriculum, Volume 4, Module 6.