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CA Final Bond Valuation — practice questions — page 3

Explore 65 free Bond Valuation questions in CA Final Strategicfinancialmanagement. Open each question or exercise to read its content, reference answers and available explanation.

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Bond Valuation questions and exercises with answers

Showing questions 61–65 of 65.

A 6% par-100 bond pays on 1 Apr and 1 Oct. On 1 Jul clean price is 98.20. Under 30/360 the dirty price is?Read the answer and worked solution →After a coupon is paid, how does a bond's dirty price behave?Read the answer and worked solution →On a bond sold at a clean quote, what does the buyer pay at settlement?Read the answer and worked solution →For a discount bond, how does YTM compare with current yield?Read the answer and worked solution →The price-yield relation of a bond is described as what?Read the answer and worked solution →

Worked practice questions

A 6% par-100 bond pays on 1 Apr and 1 Oct. On 1 Jul clean price is 98.20. Under 30/360 the dirty price is?

  1. Rs 98.20
  2. Rs 96.70
  3. Rs 99.70
  4. Rs 101.20
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Correct answer: C. Rs 99.70

Half-yearly coupon is 3, accrual is 90/180 = 0.5, so interest is 1.50 and dirty price is 98.20 + 1.50 = 99.70.

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After a coupon is paid, how does a bond's dirty price behave?

  1. Rises by about the coupon
  2. Stays exactly unchanged
  3. Rises to double its value
  4. Falls by about the coupon
Show answer and solution

Correct answer: D. Falls by about the coupon

Accrued interest resets to zero at the coupon date, so the dirty price falls by about the coupon amount.

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On a bond sold at a clean quote, what does the buyer pay at settlement?

  1. Quote plus accrued interest
  2. Quote minus accrued interest
  3. Only the face value
  4. Only the accrued interest
Show answer and solution

Correct answer: A. Quote plus accrued interest

The accrued interest is added to the quoted clean price to arrive at the amount paid.

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