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Finra Series-7 Exam - Topic 7 Question 3 Discussion

Bubba buys a 5% bond that matures in 15 years with a 5.10 basis. How much did he pay for the bond?
B) 98.96
A) 5.00
C) 100.00
D) 105.10

Finra Series-7 Exam - Topic 7 Question 3 Discussion

Actual exam question for Finra's Series-7 exam
Question #: 3
Topic #: 7
[All Series-7 Questions]

Bubba buys a 5% bond that matures in 15 years with a 5.10 basis. How much did he pay for the bond?

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Suggested Answer: B

98.96. A calculator is not required for this. Even Bubba knows the bond is obviously trading at a slight discount by yielding 5.10% instead of the coupon rate of 5%. If the yield was the same as the coupon rate, the price is 100.00.


by Dottie at May 07, 2022, 05:17 AM

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Phuong
10 months ago
5% bond with a 5.10 basis? Interesting combo!
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Latricia
10 months ago
I thought bonds were usually at par or above.
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Mariko
11 months ago
Wait, is it really that low? Sounds off to me.
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Becky
11 months ago
Definitely B, makes sense with the basis.
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Kallie
11 months ago
He probably paid around 98.96 for that bond.
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Zona
11 months ago
I’m confused about whether the bond price should be above or below par. I think I need to double-check how the basis affects the price calculation.
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Charlette
11 months ago
I feel like the answer should be lower than 100 since the basis is higher than the coupon rate. Maybe it's B?
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Paz
11 months ago
This seems similar to a practice question we did on bond pricing. I think the basis points might help us find the price, but I can't recall the exact formula.
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Iluminada
11 months ago
I remember something about calculating the price of a bond based on its yield and coupon rate, but I'm not entirely sure how to apply it here.
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Alisha
11 months ago
Optimizing the BGP route table by exporting IGP routes into BGP is a common technique, but I don't think it's considered a best practice. I'll rule that one out.
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Lauran
11 months ago
I'm pretty confident about this one. The key is to identify the false statement, which seems to be option C.
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