You buy a 7 percent semi-annual coupon, 20-year maturity bond today. The bond has a par value
Fantastic news! We've Found the answer you've been seeking!
Question:
A $1,000 par value T-Note with 10 years to maturity and 2.625% coupon rate is converted into STRIPS by Citibank and sold to investors for a yield of 2.5%.
What is the price of each STRIP?If Citibank is earning a yield of 2.75% on the note, what is their net gain in terms of dollars (Think what price they paid for the notes and what is the net price they are getting from the STRIPS)?
Related Book For
Fundamentals of corporate finance
ISBN: 978-0073382395
9th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
Posted Date: