Exhibit 19 -Refer to Exhibit 19

question 28

Multiple Choice

Exhibit 19.6
Use the Information Below for the Following Problem(S)
The following information is given concerning a substitution swap. You currently hold a 25 year, Aa 10 percent coupon bond priced to yield 12 percent. As a swap candidate you are considering a 25 year, Aa 10 percent coupon bond priced to yield 13 percent. Assume a reinvestment rate of 12 percent, semiannual compounding, and a one-year workout period.
$$\begin{array} { l c c } & \text { Current Bond } & \text { Candidate Bond } \\\hline \text { Dollar Investment } & \$ 842.38 & ? \\\text { Caupan } & 100.00 & 100.00 \\\text { i an One Coupon } & 3.0 & 2.75 \\\text { Principal Value at Year End } & 843.50 & 780.46 \\\text { Total Accrued } & 946.50 & 883.21 \\\text { Total Gain } & 104.12 & ? \\\text { Gain per Invested Dollar } & ? & ? \\\text { Realized Compound Yield } & ? & ?\end{array}$$
-Refer to Exhibit 19.6.The dollar investment in the candidate bond is

• A) $1515.36
• B) $853.50
• C) $780.46
• D) $779.13
• E) $877.53

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Definitions:

Preexisting Conditions

Health issues or conditions that existed before an individual's health benefits or insurance coverage was initiated.

Deny Coverage

Refers to an insurance company's decision not to approve a claim, based on the terms of an insurance policy.

Elective Surgical Procedure

A surgery that is planned in advance and is not essential to save the patient's life, often aimed at improving quality of life.

Equilibrium Price

The price at which the quantity of a good demanded equals the quantity supplied, resulting in market balance.