In: Finance
The following table shows the prices of a sample of U.S. Treasure STRIPs in August 2020. Each strip makes a single payment of $1,000 at maturity without any coupons. (10 points)
Maturity |
Price (%) |
August 2021 |
95.53 |
August 2022 |
91.07 |
August 2023 |
86.20 |
August 2024 |
81.08 |
Calculate the annually compounded, spot interest rate for each year.
Spot rate for 1-year strip =
Spot rate for 2-year strip =
Spot rate for 3-year strip =
Spot rate for 4-year strip =
Please refer to below spreadsheet for calculation and answer. Cell reference also provided.
Cell reference -