U.S. Treasury STRIPS with a $1,000 face value maturing in five years has a yield to maturity

Question:

U.S. Treasury STRIPS with a $1,000 face value maturing in five years has a yield to maturity of 7 percent. What is the current price of this STRIPS?

a. $930

b. $712.99

c. $708.92

d. $650.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Fundamentals Of Investments Valuation And Management

ISBN: 9781266824012

10th Edition

Authors: Bradford Jordan, Thomas Miller, Steve Dolvin

See More Books

Question Posted: Dec 30, 2023 01:52 AM

See More Questions

Steel Corporation is facing uncertainty for the coming year. Economists estimate that a good business environment and a bad business environment are equally likely. Managers of Steel Corporation must...
A US Treasury note with 5-years to maturity currently trades for$97.865 per $100 of face value. The bond pays coupons semi-annually. Assuming a 6%market yield, determine the (annualized) coupon rate...
A) An investment bank creates STRIPS from $10,000,000 U.S. 3.00% coupon rate Treasury bond due in seven years. The banker paid 93.95% of face value for it for a yield to maturity of 4.00%. What is...
Match the following ratios with the appropriate formula. Ratio or Rate Formula a. Income from operations Interest expense Acid-test Total liabilities Stockholders' equity Current b. Net income-...
Calculate the moduli of resilience for the materials having the stress?strain behaviors shown in Figures 6.12 and 6.21. 500 70 Tensile strength 450 MPa (65,000 psi) 60 400 50 10 psi 40 MPa 300 40 30...
It takes Cookie Cutter Modular Homes, Inc, about six days to receive and deposit checks from customers. Cookie Cutter's management is considering a lockbox system to reduce the firm's collection...
A capital investment project involves the purchase of a 3-D soldering station for $\$ 15,000$, producing an annual net benefit of $\$ 2,250$. The system has an 8-year useful life with a salvage value...
My firm has a wage contract with the union. Therefore, we do not need to compute a labor price variance; it will always be zero. Comment.
This is an INDIVIDUAL assignment You are to write a brief report outlining your experiences before and during the mediations that you experienced in the various roles you held.
Suppose the yield on a two-year STRIPS is 7 percent and the yield on a one-year STRIPS is 6 percent. Based on the expectations theory, what will the yield on a one-year STRIPS be one year from now?
A money market instrument with 60 days to maturity has a quoted ask price of 99, meaning $99 per $100 face value. What are the bankers discount yield, the bond equivalent yield, and the effective...
What has been the general pattern of U.S. budget deficits in recent decades?
Suppose each of 50 distinguishable objects has a volume of $1.00 \times 10^{-9} \mathrm{~mm}^{3}$ and are initially in a box that has a volume of $1.00 \times 10^{-6} \mathrm{~m}^{3}$. If the...
Do you believe the accommodations offered by Tatums firm are effective in helping individuals balance work and family lives? Why or why not?
Discuss the drug associated with the highest percentage of juvenile arrests. Sketch a profile of juveniles who sell drugs.
a. Find the eigenvalues and eigenvectors of the matrix. b. Confirm the results of (a) in MATLAB. $\mathbf{A}=\left[\begin{array}{cc}5 & -2 \\ 2 & 0\end{array} ight]$
An engineer planning a weld from manufacturer specifications realizes that the units for temperature have been accidentally omitted. The specifications say, "The temperature of the weld should be no...
Cortez Enterprises has two divisions: Birmingham and Tampa. Birmingham currently sells a diode reducer to manufactures of aircraft navigation systems for $775 per unit. Variable costs amount to $500,...
Why do bars offer free peanuts?
How effective was the solution Sears selected? Explain your answer.
Does the Volkswagen emission cheating crisis pose an ethical dilemma? Why or why not? If so, who are the stakeholders ?
Describe the role of management, organization, and technology factors in creating VWs software cheating problem. To what extent was management responsible? Explain your answer.
Identifying, accumulating, and assigning costs to a cost object is known as what?
How do transmedia storytelling strategies facilitate the construction of complex, interconnected narratives across various media platforms, and what implications does this have for audience...
Money (medium of exchange, unit of account, or store of value) is being used in each of the following examples. I am saving $80 per week to pay for my books next semester. I paid $85 for the digital...

U.S. Treasury STRIPS with a $1,000 face value maturing in five years has a yield to maturity

Question:

Step by Step Answer:

The correct answer is b 71299 Heres how we can calculate the current price of the STRIPS Determine t...View the full answer

Fundamentals Of Investments Valuation And Management

Students also viewed these Business questions