Exhibit 19.11 Use the Information Below for the Following Problem(S)

question 29

Multiple Choice

Exhibit 19.11
Use the Information Below for the Following Problem(S)
Consider two bonds, both pay semiannual interest. Bond X has a coupon of 7% per year, maturity of 20 years, yield to maturity of 8% per year, and a face value of $1000. Bond Y has a coupon of 7% per year, maturity of 20 years, yield to maturity of 8.5% per year, and a face value of $1000.
-Refer to Exhibit 19.11.Calculate the percentage gain per invested dollar for Bond X assuming a one year horizon,and a reinvestment rate of 8% per year.

• A) 2.35%
• B) 4.08%
• C) 7.92%
• D) 8.16%
• E) 8.32%

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Definitions:

Plows

Agricultural tools used for turning over the soil, typically to prepare it for planting crops by cutting, lifting, and overturning it.

Fertilizers

Substances added to soil to improve its fertility by supplying essential nutrients to plants, including nitrogen, phosphorus, and potassium compounds.

Digging Sticks

Simple tools used since ancient times for breaking the ground for planting seeds or for digging up roots and tubers.

Plows

Agricultural tools used for turning over the soil to prepare it for planting seeds by cutting, lifting, and turning over the soil.