A Two-Year STRIPS Sells at an Interest Rate of 3

question 78

Multiple Choice

A two-year STRIPS sells at an interest rate of 3.84 percent and a three-year STRIPS sells at a rate of 3.97 percent.What is the implied one year interest rate two years from now? Assume the rates are effective annual rates.

• A) 4.23 percent
• B) 4.36 percent
• C) 4.41 percent
• D) 4.45 percent
• E) 4.50 percent

---

Definitions:

Buying Center Synergy

The enhanced outcomes achieved when members of a purchasing decision-making group in an organization collaborate effectively.

Private Exchange Efficiency

The effectiveness and optimization of exchanges or transactions conducted in a private marketplace or platform, often emphasizing lower costs and improved experience for participants.

Derived Demand

Refers to the demand for a good or service resulting from the demand for another good or service.

B2B Sales

Business-to-Business sales involve transactions between businesses, such as a manufacturer selling to a wholesaler, rather than selling directly to the end consumer.