Exhibit 16-2
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 31

Multiple Choice

Exhibit 16-2
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
The following information is given concerning a substitution swap: You currently hold a 15 year, 7% coupon bond priced to yield 8%. As a swap candidate you are considering a 15 year, 7% coupon bond priced to yield 8.5%. Assume a reinvestment rate of 8.5%, semiannual compounding, and a one-year workout period. $\begin{array}{lcc}&\text { Current Band } & \text { Candidate Band } \\\hline \text { Dollar Investment } & \$ 913.54 & ? \\\text { Coupon } & 70.00 & 70.00 \\\text { i on One Coupon } & 1.487 & 1.487 \\\text { Principal Value at Year End } & 916.68 & 878.55 \\\text { Total Accrued } & 988.17 & 950.04 \\\text { Total Gain } & 74.63 & ? \\\text { Gain per Invested Dollar } & ? & ? \\\text { Realized Compound Yield } & ? & ?\end{array}$
-Refer to Exhibit 16-2. The dollar investment in the candidate bond is

• A) $812.57
• B) $803.22
• C) $874.16
• D) $746.83
• E) $700.01

---

Definitions:

More Assertive

Pertains to being confident and direct in dealing with others, often in communication or behavior, without being aggressive.

Gender Differences

Variations in characteristics, behaviors, physical development, and roles attributed or assigned to males and females.

Weak Situation

A setting in which clear expectations for behavior are lacking, allowing greater expression of personality differences.

Neurotic

Refers to an individual experiencing, or prone to experience, a high level of emotional instability and anxiety.