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:

Subordinate

An individual who is under the authority or control of another, often in a workplace hierarchy.

Personalized Power Orientation

A tendency to seek power for personal gain rather than for the benefit of others or the organization.

Personal Loyalty

is the dedication and allegiance an individual has towards another person, group, or organization, impacting decisions and actions based on these strong personal ties.

Empower Subordinates

The practice of giving employees more autonomy, authority, and control over their work and decision-making processes, enhancing their sense of empowerment.