Exhibit 13.4 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM The following information is given concerning a pure yield pick-up swap: You currently hold a 10-year, 7 percent coupon bond priced to yield 8 percent. As a swap candidate, you are considering a 10-year, 8 percent coupon bond priced to yield 9 percent. Assume a reinvestment at 9 percent, semiannual compounding, and a one-year workout period. Current Bond Candidate Bond Dollar Investment $932.05 $934.96 $70.00 $80.00 ? Coupon i on One Coupon Principal Value at Year End Total Accrued Realized Compound Yield $1.575 $936.70 ? $1,008.28 8.018% ? ? Refer to Exhibit 13.4. The realized compound yield on the candidate bond is a. 11.0%. b. 7.0%. c. 9.0%. O d. 12.0%. O e. 10.0%