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Exhibit 19.2
Use the Information Below for the Following Problem(S)
The following information is given concerning a substitution swap. You currently hold a 15 year, 7 percent coupon bond priced to yield 8 percent. As a swap candidate you are considering a 15 year, 7 percent coupon bond priced to yield 8.5 percent. Assume a reinvestment rate of 8.5 percent, semiannual compounding, and a one-year workout period.
-Refer to Exhibit 19.2.The value of the swap is ____ basis points in one year.
Percentage Analysis
A financial analysis technique that evaluates the proportion or percentage change of individual components in financial statements over time.
Adjusting Entry
Accounting records created at the closing of a fiscal period to distribute expenses and revenues to the time they were truly incurred.
General Journal
A basic accounting ledger used to record all types of accounting transactions before they are transferred to specific accounts in the general ledger.
Cash Receipts Journal
A specialized accounting journal used in the double-entry bookkeeping system to keep track of all cash transactions that increase (debit) the cash account.
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