A STRIPS traded on February 28, 2021, matures in 18 years on Mar

Finance Oct 15, 2020

A STRIPS traded on February 28, 2021, matures in 18 years on Mar. 1, 2039. Assuming a yield to maturity 4.3 percent, what is the STRIPS price, (Use Excel to answer this gum* Enter your answer as a percentage of par value. Round your answer to 9 decimal places.)

Expert Solution

We can calculate the STRIPS price by using the following formula in excel:-

=-pv(rate,nper,pmt,fv)

Here,

PV = STRIPS price

Rate = 4.3%

Nper = 18 years

Pmt = 0

FV = $100

Substituting the value in formula:

= -pv(4.3%,18,0,100)

= $46.8687

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