Exhibit 19 -Refer to Exhibit 19

question 23

Multiple Choice

Exhibit 19.1
Use the Information Below for the Following Problem(S)
The following information is given concerning a pure yield pick-up swap: You currently hold a 10 year, 7 percent coupon bond priced to yield 8 percent. As a swap candidate you are considering a 10 year, 8 percent coupon bond priced to yield 9 percent. Assume a reinvestment at 9 percent, semiannual compounding, and a one-year workout period.
$$\begin{array} { l c c } & \text { Current Bond } & \text { Candidate Bond } \\\hline \text { Dollar Investment } & \$ 932.05 & \$ 934.96 \\\text { Caupan } & \$ 70.00 & \$ 80.000 \\\text { i an One Coupon } & \$ 1.575 & ? \\\text { Principal Value at Year End } & \$ 936.70 & ? \\\text { Total Accrued } & \$ 1008.28 & ? \\\text { Realized Compound Yield } & 8.018 \% & ?\end{array}$$
-Refer to Exhibit 19.1.The value of the swap is ____ basis points in one year.

• A) 32.3
• B) 48.7
• C) 75.8
• D) 98.2
• E) 104.3

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Definitions:

Counterconditioning

A behavior therapy technique where a positive stimulus is introduced with the fear-evoking stimulus at the same time, to try to replace the negative response with a positive one.

Operant Conditioning

A learning process by which the likelihood of a behavior is increased or decreased through reinforcement or punishment following the behavior.

Effectiveness Of Therapy

The degree to which a particular therapy or treatment achieves its intended outcome(s) or results in a beneficial change or improvement in symptoms.

Behavioural Changes

Alterations in an individual's actions or reactions, often as a result of psychological interventions, learning, or environmental factors.