Exhibit 16-7 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 60

Multiple Choice

Exhibit 16-7
USE THE FOLLOWING INFORMATION FOR THE NEXT 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 16-7. Calculate the percentage gain per invested dollar for Bond B assuming a one year horizon, and a reinvestment rate of 9.5% per year.

• A) 9.73%
• B) 9.93%
• C) 9.20%
• D) 8.20%
• E) 9.50%

---

Definitions:

Hedging Sentence

A statement made with cautious language to lessen the impact of an assertion or to express uncertainty.

Performance

The act of carrying out a task or function, often evaluated in terms of effectiveness, efficiency, or achievement of objectives.

Deadline

A specific time or date by which a task must be completed.

Specific Pointers

Detailed and direct pieces of advice or information aimed at guiding action or understanding.