A STRIPS traded on April 1 2011, matures in 10 years on April 1 2021. Assuming a
ID: 2639252 • Letter: A
Question
A STRIPS traded on April 1 2011, matures in 10 years on April 1 2021. Assuming a 5 percent yield to maturity, assume a face value of $100. What is the STRIPS price? (Use Excel to answer this question. Round your answer to 4 decimal places. Omit the "%" sign in your response.)
A STRIPS traded on April 1 2011, matures in 10 years on April 1 2021. Assuming a 5 percent yield to maturity, assume a face value of $100. What is the STRIPS price? (Use Excel to answer this question. Round your answer to 4 decimal places. Omit the "%" sign in your response.)
Explanation / Answer
A STRIPS traded on April 1 2011, matures in 10 years on April 1 2021. Assuming a 5 percent yield to maturity, assume a face value of $100. What is the STRIPS price? (Use Excel to answer this question. Round your answer to 4 decimal places. Omit the "%" sign in your response.)
STRIPS price = 100/1.05^10
STRIPS price = 61.3913 %