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  • Exam Code: H13-624_V5.5
  • Exam Name: HCIP-Storage V5.5
  • Version: V17.95
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  • Exam Code: H13-624_V5.5
  • Exam Name: HCIP-Storage V5.5
  • Version: V17.95
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  • Exam Name: HCIP-Storage V5.5
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Tony Horn, CFA, is evaluating two bonds. The first bond, issued by Kanon Corp., pays a 7.5% annual coupon and is priced to yield 7.0%. The second bond, issued by Samuel Corp., pays a 7.0% annual coupon and is priced to yield 8.0%. Both bonds mature in ten years. If Horn can reinvest the annual coupon payments from either bond at 7.5%, what would his return be on each bond, assuming the bond was held to maturity?
A. Less than 7.0% on the Kanon bonds and less than 8.0% on the Samuel bonds.
B. Greater than 7.0% on the Kanon bonds and less than 8.0% on the Samuel bonds.
C. Greater than 7.0% on the Kanon bonds and greater than 8.0% on the Samuel bonds.
Answer: B

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Explanation

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