Exhibit 19.7 Use the Information Below for the Following Problem(S)

question 31

Multiple Choice

Exhibit 19.7
Use the Information Below for the Following Problem(S)
Consider two bonds, both pay semiannual interest. Bond A has a coupon of 8% per year, maturity of 30 years, yield to maturity of 9% per year, and a face value of $1000. Bond B has a coupon of 8% per year, maturity of 30 years, yield to maturity of 9.5% per year, and a face value of $1000.
-Refer to Exhibit 19.7.Calculate the percentage gain per invested dollar for Bond A assuming a one year horizon,and a reinvestment rate of 9% per year.

• A) 9.73%
• B) 9.93%
• C) 9.20%
• D) 8.20%
• E) 9.50%

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Definitions:

Domino's

A multinational pizza restaurant chain known for its wide variety of pizza options and fast delivery services.

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A division within a company that focuses on creating and implementing strategies to promote and sell products or services.

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An American soft drink company that manufactures, markets, and distributes non-alcoholic beverages including Dr. Pepper, 7UP, and Snapple.