Question: A $ 5 0 , 0 0 0 , 2 5 - year strip bond earns interest at the rate of 3 . 6 %

A $50,000,25-year strip bond earns interest at the rate of 3.6% compounded semi-annually?
(a) How much would you pay for this strip bond?
(b) What would be the value of the strip bond if interest rates for 25-year strip bonds drop 20 basis points just after you purchase it?
A $50,000,25-year strip bond earns interest at the rate of 3.6%

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