Exhibit 19 -Refer to Exhibit 19

question 52

Multiple Choice

Exhibit 19.4
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 8 percent coupon bond priced to yield 10 percent. As a swap candidate you are considering a 25 year, Aa 8 percent coupon bond priced to yield 10.50 percent. Assume a reinvestment rate of 10 percent, semiannual compounding, and a one-year workout period.
$$\begin{array} { l c c } & \text { Current Bond } & \text { Candidate Bond } \\\hline \text { Dollar Investment } & \$ 817.44 & ? \\\text { Caupan } & 80.00 & 80.00 \\\text { i an One Coupon } & 2.00 & 2.20 \\\text { Principal Value at Year End } & 819.23 & 782.33 \\\text { Total Accrued } & 901.23 & 864.53 \\\text { Total Gain } & 83.79 & ? \\\text { Gain per Invested Dollar } & ? & ? \\\text { Realized Compound Yield } & ? & ?\end{array}$$
-Refer to Exhibit 19.4.The value of the swap is ____ basis points in one year.

• A) 26.91
• B) 26.25
• C) 31.25
• D) 41.25
• E) 51.25

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Definitions:

Dependent Variable

The variable in an experiment that is expected to change as a result of manipulations made to the independent variable.

Dependent Variable

In scientific research, the variable that is being tested and measured; it is expected to change as a result of variations in the independent variable.

Independent Variable

The variable that is changed or controlled in a scientific experiment to test the effects on the dependent variable.

Independent Variables

In experimental research, variables that are manipulated or controlled by the researcher to study their effect on dependent variables.