Exhibit 19.11 Use the Information Below for the Following Problem(S)

question 60

Multiple Choice

Exhibit 19.11
Use the Information Below for the Following Problem(S)
Consider two bonds, both pay semiannual interest. Bond X has a coupon of 7% per year, maturity of 20 years, yield to maturity of 8% per year, and a face value of $1000. Bond Y has a coupon of 7% per year, maturity of 20 years, yield to maturity of 8.5% per year, and a face value of $1000.
-Refer to Exhibit 19.11.Calculate the percentage gain per invested dollar for Bond Y assuming a one year horizon,and a reinvestment rate of 8.5% per year.

• A) 7.84%
• B) 7.97%
• C) 8.18%
• D) 8.34%
• E) 8.56%

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