Revision as of 19:25, 19 November 2023 by Admin (Created page with "A six-year 1000 face amount bond has an annual coupon rate of 8% semiannually. The bond currently sells for 911.37. Calculate the annual effective yield rate. <ul class="mw-excansopts"><li>7.29%</li><li>8.00%</li><li>9.72%</li><li>10.00%</li><li>10.25%</li></ul> {{soacopyright | 2023 }}")
ABy Admin
Nov 19'23
Exercise
A six-year 1000 face amount bond has an annual coupon rate of 8% semiannually. The bond currently sells for 911.37.
Calculate the annual effective yield rate.
- 7.29%
- 8.00%
- 9.72%
- 10.00%
- 10.25%
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
ABy Admin
Nov 19'23
Solution: E
Using the BAII Plus calculator:
n = 12
PV = 911.37
PMT = -40
FV = -1000
CPT I/Y and you get 5.0% is the half-year rate:
[[math]]
{\frac{i^{(2)}}{2}}.\ (1+i)=(1+0.05)^{2};i=0.1025
[[/math]]
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.