标题: Schweser Practice Exam Book 2, Exam 1, #44 [打印本页] 作者: karoliukas 时间: 2013-4-1 12:54 标题: Schweser Practice Exam Book 2, Exam 1, #44
Can anyone confirm that there’s an error in this problem?
The answer is valuing the bond such that the call price is 100, but the vignette gives 101 as the call price. Therefore the answer should be C, not B (given).
?作者: Sunshine4ever 时间: 2013-4-1 12:54
there is an error, i think call price is 100作者: mar350 时间: 2013-4-1 12:54
“The bonds are currently callable at 101, and beginning in six months, they are callable at par.”作者: OmarAdnan 时间: 2013-4-1 12:54
i haven’t seen the question, but does spunboy’s answer above help? Is it asking for a value after 6 months and therefore you use the par call price?作者: chandsingh 时间: 2013-4-1 12:54
It’s asking for a value for an interest rate tree, the vignette says that the bond can be called away at 101, but the answer given calculates it as if the bond can be called away at 100.作者: Kapie 时间: 2013-4-1 12:54
right, so after 6mo they can be called at par, as stated in the vignette. so at the 1 year and 2 year node the max price is par, not 101 since it’s past 6mo作者: redskins44 时间: 2013-4-1 12:55
The vignette says that it can be called away at 101, not par.作者: RoastBeef 时间: 2013-4-1 12:55
sorry for my misinformation.
i remember the q, but hadn’t looked at it in a while.作者: Windjam 时间: 2013-4-1 12:55
I don’t follow the issue here, the vignette very clearly states that the call price is 100 in 6 months time. When you value the bond at the Year 1 node (which is after 6 months) you MUST use the 100 call price. Read the question, it’s very clear that the call price is NOT 101 in Year 1.
