You Own a Principal STRIPS Which Is Based on a 4.5

question 6

Multiple Choice

You own a principal STRIPS which is based on a 4.5 percent coupon Treasury bond that matures in 20 years.The STRIPS is priced at $22,868 and has a par value of $50,000.What is the yield to maturity on the STRIPS?

• A) 3.79 percent
• B) 3.90 percent
• C) 3.93 percent
• D) 3.95 percent
• E) 3.99 percent

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