Verified solution · Exam FM
This Exam FM sample reference tests Bond Pricing and Yields. Per unit face, coupon rate 2.25i makes price equal to 2.25 minus 1.25 times v to the term. The first premium implies v to the eighteenth = 0.5120; the second premium then gives v to the n = 0.64, resulting in n = 12 and choice B.
Independent solution
Setup
Price each bond per unit face using coupon rate 2.25 times yield.
Model
Use the 18-year price to recover the annual discount factor.
Compute
The second price gives v to the n = 0.64. Dividing logarithms gives n = 12.000000.
Answer
The second bond has a 12-year term, so choice B is correct.
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Original practice · fully worked
At a 4% annual yield, a 15-year bond has coupon rate k times its yield and sells for 1.30 per unit face. Another bond has the same coupon-to-yield multiple and an eight-year term. Calculate its price per unit face.
The 15-year price calibrates coupon multiple k = 1.6746. Applying that multiple to the eight-year discount factor gives price ratio 1.1817, choice E.
Setup
Use the first bond's price to solve the coupon-to-yield multiple.
Model
Apply the recovered multiple to the eight-year bond.
Compute
The calibrated multiple is 1.67455825, and the second price ratio is 1.18166514.
Answer
The eight-year price is 1.1817 per unit face, selecting choice E.
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ActuaryProof. “SOA Exam FM Sample Question #263 — Verified Solution.” Verified 2026-07-31.
Source reference: official SOA sample-question PDF. Last reviewed 2026-07-31.
