What Is the Current Value of a $5,000 Face Value

question 69

Multiple Choice

What is the current value of a $5,000 face value STRIPS with 6 years to maturity and a yield to maturity of 8.1 percent?

• A) $2,998.09
• B) $3,009.16
• C) $3,105.02
• D) $3,128.10
• E) $3,133.40

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Definitions:

Amortize

The process of gradually paying off a debt over a period through scheduled payments, which may include interest.

Compounded Monthly

Interest on an investment or loan calculated and added to the principal balance on a monthly basis, allowing it to grow at an accelerated rate.

Monthly Payment

Monthly payment is the amount of money paid each month on a loan, mortgage, or other debt.

Amortization Schedule

An Amortization Schedule is a table detailing each periodic payment on an amortizing loan, showing amounts paid to principal and interest.