Verified solution · Exam FM
This Exam FM sample reference tests Bond Pricing and Yields. Per unit face, the 27-year coupon bond price is (21/37)(1 − v²⁷) + v²⁷. Setting this to 0.75 gives yield 3.2481%. A zero at the same 0.75 price then has term 9 years, choice C.
Independent solution
Setup
Express the coupon rate as 21/37 times yield and price the coupon bond per unit face.
Model
Solve the discount factor and annual yield.
Compute
For the equal-priced zero, solve 0.75 = v to the n, giving n = 9.000000.
Answer
The zero-coupon bond matures in 9 years, selecting choice C.
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Error diagnosis
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Original practice · fully worked
A 20-year bond yields 3% annually and sells for 0.85 per unit face. Its annual coupon rate equals k times its yield. Calculate k.
Writing price as k times one minus the 20-year discount factor plus that discount factor and solving gives k = 0.6639, choice D.
Setup
Price the bond per unit face using coupon rate k times the yield.
Model
Insert i = 3% and isolate k.
Compute
The 20-year discount factor gives k = 0.66392146.
Answer
The coupon-to-yield multiple is 0.6639, selecting choice D.
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Drill the method: Exam FM Bond Valuation, Pricing, and Yields problems
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ActuaryProof. “SOA Exam FM Sample Question #297 — Verified Solution.” Verified 2026-07-31.
Source reference: official SOA sample-question PDF. Last reviewed 2026-07-31.
