What is the price of a Treasury STRIPS with a face value of $100,000 that matures...

What is the price of a Treasury STRIPS with a face value of $100,000 that matures in 14 years and has a yield to maturity of 10 percent?

(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Solutions

Expert Solution

K = N

Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k] + Par value/(1 + YTM)^N

k=1

K =14

Bond Price =∑ [(0*100000/100)/(1 + 10/100)^k] + 100000/(1 + 10/100)^14

k=1

Bond Price = 26333,13

Using Calculator: press buttons "2ND"+"FV" then assign

PMT = Par value * coupon %=100000*0/(100)

I/Y =10

N =14

FV =100000

CPT PV

Using Excel

=PV(rate,nper,pmt,FV,type)

=PV(10/(100),14,-0*100000/(100),-100000,)

jeff jeffy answered 1 year ago

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