- CFA Exams
- 2025 Level I
- Topic 6. Fixed Income
- Learning Module 6. Fixed-Income Bond Valuation: Prices and Yields
- Subject 4. Matrix Pricing
Seeing is believing!
Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.
Subject 4. Matrix Pricing PDF Download
Most bonds don't trade on a daily basis. Usually only the most recent large issues have the greatest liquidity and pricing ability. There is rarely a consensus on the exact value of an individual bond.
Matrix pricing is the practice of interpolating among values for similar instruments arranged in a matrix format.
It attempts to categorize bonds with similar features (e.g., type of issuer, credit rating, coupon, maturity, etc.) and apply a general yield level to the entire category of bonds. Typically a required yield over the benchmark rate is estimated.
It then calculates the approximate price of a specific bond within a category using the derived yield level.
It represents an educated guess and not an actual offer or trade price.
User Contributed Comments 0
You need to log in first to add your comment.
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
My Own Flashcard
No flashcard found. Add a private flashcard for the subject.
Add