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:

Multifactor Model

An investment model that evaluates securities by taking into account multiple economic and financial factors to predict their return.

Expected Inflation

The rate at which prices for goods and services are anticipated to rise over a certain period of time.

Factor Model

A financial model that explains different sources of risk and return in an investment portfolio through various factors.

Factor Risk

The risk associated with specific factors that can affect the returns on an investment, such as changes in interest rates, stock market volatility, or inflation.