Exhibit 19.7 Use the Information Below for the Following Problem(S)

question 43

Multiple Choice

Exhibit 19.7
Use the Information Below for the Following Problem(S)
Consider two bonds, both pay semiannual interest. Bond A has a coupon of 8% per year, maturity of 30 years, yield to maturity of 9% per year, and a face value of $1000. Bond B has a coupon of 8% per year, maturity of 30 years, yield to maturity of 9.5% per year, and a face value of $1000.
-Refer to Exhibit 19.7.Calculate the value of swap out of Bond A into Bond B.

• A) 0.41%
• B) 1.73%
• C) 0.23%
• D) 0.00%
• E) 0.51%

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Definitions:

Non-Current Liability

Long-term financial obligations listed on a company's balance sheet, not due within one year.

Deferred Revenue

Income received by a company for goods or services yet to be delivered or performed.

Mortgages Payable

Long-term liabilities representing money a company owes on property mortgages that are due beyond the next year.

Periodic Instalment

Periodic installment refers to a regular, scheduled payment made over time towards settling a debt, which may include portions of both principal and interest.