Bond Equivalent yield question

CFA Level I
#1

Exactly one year ago, an investor purchased a 1000 face value, zero coupon bond with 11 years remaining to maturity. The YTM was 8.0%. Now, one year later, with mkt rates unchanged, an investor purchases an annuity that pays $40 every six months for 10 yrs. The combined value of the two investments based on the 8% BEY is approximately: A) $966 B) $1000 C) $1007 D) $1456

#2

Answer B a: FV=-1000, I/Y=4, N=20 PV = 453.69 b: PMT=40, I/Y=4, N=20 PV = 543.61 Sum = 1000

#3

B

#4

B is correct