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IIA Exam IIA-CFSA Topic 1 Question 32 Discussion

Actual exam question for IIA's IIA-CFSA exam

Question #: 32
Topic #: 1

[All IIA-CFSA Questions]

A bond currently priced at $1,250 with a 10% nominal yield of $100 would have a current ield of _____________. The same bond priced at $800 would have a current yield of __________.

A9%, 12.5%

B12.5%, 9%

C8%, 12.5%

D12.5%, 8%

Show Suggested Answer

Suggested Answer: D

by Garry at Mar 31, 2023, 03:10 AM

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Gaston

3 months ago

Okay, let me think this through step-by-step. The current yield is just the nominal yield divided by the price. So for the $1,250 bond, it's 8%. And for the $800 bond, it's 12.5%. I think I got it!

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Nell

2 months ago

Great job on figuring that out step-by-step! It's important to understand how bond pricing affects current yield.

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Gussie

2 months ago

I see, so the current yield is just the nominal yield divided by the price. Thanks for breaking it down!

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Mary

2 months ago

That's correct! The current yield for the $1,250 bond is 8% and for the $800 bond is 12.5%.

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Mayra

3 months ago

Haha, this exam is trying to trick us. It's like they want us to mess up the basic current yield formula!

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Jamal

2 months ago

D) 12.5%, 8%

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Jean

2 months ago

B) 12.5%, 9%

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King

2 months ago

A) 9%, 12.5%

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Winfred

3 months ago

Let's calculate it. The current yield is the annual interest divided by the bond price, so it should be 8%.

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Iraida

3 months ago

Wait, how is the current yield for the $800 bond 12.5%? Isn't that just the nominal yield divided by the price?

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Kayleigh

26 days ago

D) 12.5%, 8%

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Yaeko

27 days ago

C) 8%, 12.5%

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Cassi

28 days ago

B) 12.5%, 9%

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Dyan

1 months ago

A) 9%, 12.5%

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Merlyn

1 months ago

D: Got it, thanks for explaining!

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Earleen

1 months ago

C: Yes, that's correct. The current yield for the $1,250 bond would be 8%.

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Gary

2 months ago

B: So, for the bond priced at $1,250, the current yield would be 8% then.

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Aracelis

2 months ago

A: The current yield for the $800 bond is 12.5% because it's the nominal yield divided by the price.

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Ashton

3 months ago

I disagree, I believe the current yield would be 12.5% at that price.

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Iluminada

3 months ago

I'm pretty sure the current yield for the $1,250 bond is 8%, not 9%. The 10% nominal yield divided by the $1,250 price gives you 8%.

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Verona

2 months ago

D) 12.5%, 8%

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Daniela

2 months ago

I think it's actually 8%, not 9%.

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Ula

3 months ago

A) 9%, 12.5%

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Winfred

3 months ago

I think the current yield would be 8% if the bond is priced at $1,250.

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