A three-year 1000 face amount bond pays coupons of X quarterly. It is bought at a price to yield an annual nominal rate of 8% convertible quarterly. If the amount of each coupon were doubled, the purchase price would have to increase by 500 for the bond to maintain the same yield rate.

Calculate X.

• 20
• 24
• 31
• 40
• 47

Kyle can buy a zero-coupon bond that will pay $1,600 at the end of 17 years and it is currently selling for 1,050. Instead he purchases a 8% bond with coupons payable quarterly that will pay $1,600 at the end of 13 years. If he pays x he will earn the same annual effective interest rate as the zero coupon bond.

Calculate x.

• $2,577.94
• $1,418.33
• $1,600.00
• $2,580.80
• $2,593.23

Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.

Amin buys a 24 year bond with a par value of $2,300 and annual coupons. The bond is redeemable at par. He pays $3,200 for the bond assuming an annual effective yield of i. the coupon rate is 4 times the yield rate. At the end of 9 years Amin sells the bond for S, which produces the same annual effective rate of I for the new buyer.

Calculate S.

• Insufficient information
• $3,051.19
• $3,721.43
• $1,875.37
• $2,156.91

Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.

Stacia buys a 5 year bond with coupons at 6% convertible monthly which will be redeemed at $1,500. She buys the bond to yield 9% convertible monthly. The purchase price is $1,100.

Calculate the par value

• $2,916.84
• $1,060.67
• $2,114.52
• $376.40
• $23.04

Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.

On February 1, Sawyer’s investment is worth $900. On August 1, the value has increased to $1600 and Sawyer deposits $D. On December 1, the value is $1400 and $400 is withdrawn. On February 1 of the following year, the investment account is worth $800. The time-weighted interest is 3%.

Calculate the dollar-weighted rate of interest.

• Insufficient information given to complete problem
• -.685
• -.033
• -.045
• -.142

Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.

Alex earned an investment income of $13,000 during 1999. The beginning and ending balances were $114,000 and $136,000. A deposit was made at time k during the year. No other deposits or withdrawals were made. The fund made 11% in 1999 using the dollar-weighted method.

Determine k.

• August 1
• May 1
• June 1
• July 1
• March 1

Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.

On January 1, 2010, Toni deposits $140 into an account. On June 1, 2010, when the amount in Toni’s account is equal to $X, a withdrawal W is made. No further deposits or withdrawals are made to Toni’s account for the remainder of the year. On December 31, 2010, the amount in Toni’s account is $100. The dollar-weighted return over the period is 15%. The time-weighted return over the 1-year period is 11%.

Calculate X.

• 123.81
• 107.91
• 98.15
• 126.73
• 172.02

Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.

Bill is looking at yield maturity rates for zero coupon bonds. They are currently quoted at 14% for one-year maturity, 16.5% for two-year maturity, and 11% for 3-year maturity. Let i be the one-year forward rate for year two implied by current yields of these bonds.

Calculate i.

• .165
• .137
• .166
• .0077
• .191

Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.

A 15 year 1000 par bond has 7% semiannual coupons and is callable at par after 10 years. What is the price of the bond to yield 5% nominal semiannual?

• 1000
• 1073
• 1156
• 1467
• 1876

References

Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.

(Broverman exercise 4.1.2) A 6% bond maturing in 8 years with semiannual coupons to yield 5% convertible semiannually is to be replaced by a 5.5% bond yielding the same return. In how many years should the new bond mature? (Both bonds have the same price, yield rate and face amount.)

• 18.5
• 19
• 20
• 21.5
• 22

References

Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.