You Buy a Principal STRIP Maturing in Five Years

question 35

Multiple Choice

You buy a principal STRIP maturing in five years. The price quote per hundred of par for the STRIP is 75.75 percent. Using semiannual compounding,what is the promised yield to maturity on the STRIP?

• A)5.632 percent
• B)5.712 percent
• C)2.816 percent
• D)2.945 percent
• E)4.566 percent

Understand and compute the rate of return on investments and interest rates required for loans.

Calculate the payment amounts for loans and annuities based on given terms and interest rates.

Understand the impact of different savings rates and investment strategies on achieving financial goals.

Evaluate the worth of leases and annuities with present value calculations.