The yield to maturity for a 20.00 year STRIPS is 5.60%. If par value is $1,000....

Question

Question

The yield to maturity for a 20.00 year STRIPS is 5.60%. If par value is $1,000. then it should sell for $_______.

business finance

Answer 1

Answer #1

selling price of STRIPS bond = par value * 1 /(1+r)^n

here,

r = 5.60%

=>0.056

n=20 year.

=>$1,000* 1/(1.056)^20

=>$336.30.

Answer 2

Similar Homework Help Questions

The yield to maturity for a 5.00 year STRIPS is 3.29%. If par value is $1,000....

The yield to maturity for a 5.00 year STRIPS is 3.29%. If par value is $1,000. then it should sell for $_______. The market price of a 13.00-year STRIPS is $369.00 The yield to maturity is ____%.
A bond with a par value of $1,000 and an annual coupon has a yield to...

A bond with a par value of $1,000 and an annual coupon has a yield to maturity of 5.60% and a current price of $975. If the bond has 18 years to maturity, what is its current yield?
Assume a par value of $1,000. Caspian Sea plans to issue a 20.00 year, semi-annual pay...

Assume a par value of $1,000. Caspian Sea plans to issue a 20.00 year, semi-annual pay bond that has a coupon rate of 7.92%. If the yield to maturity for the bond is 8.41%, what will the price of the bond be?

Consider the following $1,000 par value zero-coupon bonds: Bond Year to Maturity Yield to Maturity A...

Consider the following $1,000 par value zero-coupon bonds: Bond Year to Maturity Yield to Maturity A 1 6.10% B 2 5.40% C 3 8.86% D 4 8.78% E 5 12.18% The expected one-year interest rate three years from now should be __________. 9.79 10.79 8.54 7.49
Field Industries' outstanding bonds have a 25-year maturity and $1,000 par value. Their nominal yield to...

Field Industries' outstanding bonds have a 25-year maturity and $1,000 par value. Their nominal yield to maturity is 9.25%, they pay interest semiannually, and they sell at a price of $1,075. What is the bond's nominal (annual) coupon interest rate? Select the correct answer. a. 9.86% b. 9.70% c. 10.18% d. 10.02% e. 10.34%
Find the yield to maturity of a 15-year, 9%, $1,000 par value semiannual bond trading at...

Find the yield to maturity of a 15-year, 9%, $1,000 par value semiannual bond trading at a price of $850. What's the current yield on this bond? Round the answers to two decimal places. Yield to maturity _______% Current yield ________%

A 14-year zero-coupon bond was issued with a $1,000 par value and a yield to maturity...

A 14-year zero-coupon bond was issued with a $1,000 par value and a yield to maturity of 9 %. If similar bonds are currently yielding 12 %, what is the approximate market value of the bond? Multiple Choice $205 $299 $801 $1,000
(Yield to maturity)The market price is $925 for a 20-year bond ($1,000 par value) that pays...

(Yield to maturity)The market price is $925 for a 20-year bond ($1,000 par value) that pays 8 percent annual interest, but makes interest payments on a semiannual basis (4 percentsemiannually). What is the bond's yield to maturity?
Consider the following $1,000 par value zero-coupon bonds: Bond Years to Maturity Yield to Maturity A...

Consider the following $1,000 par value zero-coupon bonds: Bond Years to Maturity Yield to Maturity A 1 6.20 % B 2 7.70 % C 3 8.20 % D 4 8.70 % E 5 10.75 % The expected 1-year interest rate 2 years from now should be _________. 19.28% 11.76% 19.34% 9.21%

A Treasury STRIPS matures in 8 years and has a yield to maturity of 5.4 percent. Assume the par value is $100,000....

A Treasury STRIPS matures in 8 years and has a yield to maturity of 5.4 percent. Assume the par value is $100,000. a. What is the price of the STRIPS? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. $ 65,293.94 Price b. What is the quoted price? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Answer is complete but not entirely correct. Quoted Price 65,206.940