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Basic Question 9 of 19
What is the value of a zero-coupon bond that has eight years to maturity and a required yield of 12%?
B. $40.39
C. $89.29
A. $39.37
B. $40.39
C. $89.29
User Contributed Comments 14
| User | Comment |
|---|---|
| wldu | Can you always assume that FV=100? |
| tomchen | yes,you can always assume Fv=100, or Fv=1000, up to question |
| Farina | I think you'll find, because the typical par of most bonds is $1000, that the CFA exams will expect you to assume this is if it's not stated explicitly in the question. Shouldn't be too confusing though, just a decimal place error. |
| jwebbs | i got it right, so i guess you just always assume semi annual unless specified? |
| 6YASHWIN | are all 0 coupan bonds semi-anually calculated |
| DonAnd | YES!!!! |
| 2014 | always compute pv for fast: 100/1.06 ^ 16 = 39.37 always pv for zero coupen bonds |
| johntan1979 | $39.3646 |
| farhan92 | $39.36462837 |
| KareemSa | Why should it be semi-annually calculated, even the interests are paid at maturity? |
| john6668 | ^ same question as KareemSa, why semiannual on zero coupons...? |
| xp_acctant | Same question as KareemSa and John6668. Why semiannual on Zero Coupon ? |
| MathLoser | Same question as KareemSa, john6668, and xp_acctant. Why semiannual on zero-coupon bond? |
| applelee | zero-coupon bond prices are typically using semi-annual periods and trade at deep discount. |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
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.