Exhibit 19 &Nbsp; &Nbsp; &Nbsp; &Nbsp; &Nbsp; &Nbsp; &Nbsp; &Nbsp; &Nbsp; &Nbsp;

question 9

Multiple Choice

Exhibit 19.3
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 20 year, Aa 8 percent coupon bond priced to yield 10 percent. As a swap candidate you are considering a 20 year, Aa 10 percent coupon bond priced to yield 10.75 percent. Assume a reinvestment rate of 12.00 percent, semiannual compounding, and a one-year workout period.
$\begin{array}{lcc} & \text { Curent Bond } & \text { Candidate Bond } \\\hline \text { Dollar Investment } & \$ 828.41 & \$ 938.83 \\\text { Coupon } & 80.00 & 100.00 \\\text { i on One Coupon } & 2.4 & ? \\\text { Principal Value at Year End } & 831.32 & ? \\\text { Total Accrued } & 913.72 & ? \\\text { Realized Compound Yield } & & ?\end{array}$
                                                                                10.5547
-Refer to Exhibit 19.3.The value of the swap is ____ basis points in one year.

• A) 40.4
• B) 60.6
• C) 80.8
• D) 20.5
• E) 100.1

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Definitions:

Imprinting

A rapid learning process that occurs within a critical or sensitive period and forms a lasting attachment or behavioral pattern.

Attachment

An emotional bond between individuals, especially evident in close personal relationships, including those between parents and their children.

Accommodation

The cognitive process of modifying existing cognitive schemas, perceptions, or understanding to incorporate new information.

Schema

A cognitive framework or concept that helps organize and interpret information.