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

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 A assuming a one year horizon, and a reinvestment rate of 9% per year.

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