CFA Institute Exam CFA-Level-I Topic 1 Question 11 Discussion

Actual exam question for CFA Institute's CFA-Level-I exam

Question #: 11
Topic #: 1

An investor buys a 25-year, 10 percent annual pay bond for $900 planning to sell the bond in 5 years when he estimates yields will be 9 percent. What is the estimate of the future price of this bond?

A$964.

B$1,000.

C$1,122.

D$1,091.

Show Suggested Answer

Suggested Answer: D

by Samuel at Jan 14, 2025, 11:49 PM

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Jina

4 months ago

Woohoo, time to show off my bond pricing skills! I'm guessing C) $1,122. Let's see if I'm as smart as I think I am!

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Jeanice

4 months ago

I'm not so sure, I would go with D) $1,091 instead.

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Cecilia

4 months ago

I think you're right, C) $1,122 sounds about right.

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Felix

4 months ago

A) $964? What is this, a discount bond? Nah, I'm going with the big bucks, C) $1,122.

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Yasuko

4 months ago

I'm going with C) $1,122, aiming for the big bucks.

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Deeanna

4 months ago

I think it's A) $964, it's a discount bond.

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Lavera

4 months ago

B) $1,000? Really? That's too easy. I bet the answer's gonna be something more complex, like C) $1,122.

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Cory

4 months ago

I agree with Zona, the future price should be $1,000 based on the decrease in yield.

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Cyril

4 months ago

D) $1,091 sounds about right to me. Time to break out the financial calculator and get this right!

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Selma

4 months ago

C) $1,122.

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Troy

4 months ago

B) $1,000.

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Bernadine

4 months ago

A) $964.

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Zona

5 months ago

I disagree, I believe the future price will be $1,000 because the yield is decreasing.

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Carmen

5 months ago

Hmm, let's see. I'd say the answer is C) $1,122. Gotta love those compound interest calculations!

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Tanesha

4 months ago

Yes, it's all about those calculations. $1,122 sounds like the right estimate.

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Quentin

4 months ago

I agree, compound interest can really boost the future price of a bond.

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Latrice

4 months ago

I think the answer is C) $1,122. The bond price will increase with lower yields.

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Glendora

5 months ago

I think the future price of the bond will be $964.

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