USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider two bonds: both pay semiannual interest. Bond X has a coupon of 7 percent per year, maturity of 20 years, yield to maturity of 8 percent per year, and a face value of $1000. Bond Y has a coupon of 7 percent per year, maturity of 20 years, yield to maturity of 8.5 percent per year, and a face value of $1000.
-Refer to Exhibit 13.11. Calculate the percentage gain per invested dollar for Bond X assuming a one-year horizon and a reinvestment rate of 8 percent per year.
A) 2.35 percent
B) 4.08 percent
C) 7.92 percent
D) 8.16 percent
E) 8.32 percent

Question

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The Answer of USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider two bonds: both pay semiannual interest. Bond X has a coupon of 7 percent per year, maturity of 20 years, yield to maturity of 8 percent per year, and a face value of $1000. Bond Y has a coupon of 7 percent per year, maturity of 20 years, yield to maturity of 8.5 percent per year, and a face value of $1000.
-Refer to Exhibit 13.11. Calculate the percentage gain per invested dollar for Bond X assuming a one-year horizon and a reinvestment rate of 8 percent per year.
A) 2.35 percent
B) 4.08 percent
C) 7.92 percent
D) 8.16 percent
E) 8.32 percent