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Thread: November Sitting Exam Question

  1. #1
    Actuary.com - Level III Poster (/iropracy's Avatar
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    November Sitting Exam Question

    I personally did not have this question...but my friend who took the exam came across this question. I think he doesn't remember all the facts. Anyway.. here it goes:

    A 1000 par callable bond has coupons of 100 (I think) and is redeemable at time t at par. The redemption value at time 1 is 1250, at time 2 it is 1150 and so on. The bond is called at time t-1. Find t.

    A)5 B)10 C)15 D)20 E) not enough information

    Again, this question was passed along from my friend to me... I am sure this isn't an accurate portrayal of the question.

    I am curious if this question rings a bell for anyone? Did you have it? What is the precise question?

    My friend picked E which is a bad choice... but was it? He was certain of two things: no interest rate given and no time (maturity) given. I think he forgot what it said exactly. Thanks for your insight.
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    Quote Originally Posted by (/iropracy View Post
    I personally did not have this question...but my friend who took the exam came across this question. I think he doesn't remember all the facts. Anyway.. here it goes:

    A 1000 par callable bond has coupons of 100 (I think) and is redeemable at time t at par. The redemption value at time 1 is 1250, at time 2 it is 1150 and so on. The bond is called at time t-1. Find t.

    A)5 B)10 C)15 D)20 E) not enough information

    Again, this question was passed along from my friend to me... I am sure this isn't an accurate portrayal of the question.

    I am curious if this question rings a bell for anyone? Did you have it? What is the precise question?


    My friend picked E which is a bad choice... but was it? He was certain of two things: no interest rate given and no time (maturity) given. I think he forgot what it said exactly. Thanks for your insight.
    So is the interest rate a function of time?

  3. #3
    Actuary.com - Level III Poster (/iropracy's Avatar
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    Quote Originally Posted by NoMoreExams View Post
    So is the interest rate a function of time?
    Who knows? I don't believe him because this is very strange question. He has to be missing something.

    I simply posted the problem to get the facts straight....to see if someone had this kind of question.
    (/

  4. #4
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    I have the same exact question as your friend's. It doesn't give the interest rate and we have to find the t. I tried to find the interest rate from the 2 callable bond but I stuck and running out of time.

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