A STRIPS Has a $10,000 Par Value and a Market

question 59

Multiple Choice

A STRIPS has a $10,000 par value and a market value of $8,590. The time to maturity is 7 years. What is the yield to maturity?

• A)2.18%
• B)3.00%
• C)4.94%
• D)5.10%
• E)5.27%

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Definitions:

Testamentary Capacity

The legal and mental ability of an individual to make or alter a valid will, including understanding the nature of the document and the assets.

Prudent Person Rule

A legal principle requiring that a person in charge of others' assets manage those assets with the care, diligence, and judgment that a prudent person would under similar circumstances.

Uniform Principal and Income Act

A statutory framework adopted by some states to standardize how income and principal from trusts and estates are allocated.

Extraordinary Medical Treatment

Exceptional or unusual healthcare interventions used in critical or life-threatening situations.