Q:
$10,000 face value strip bond has 15 years remaining until maturity. If the prevailing market rate of return is 6.5% compounded semiannually, what is the fair market value of the strip bond?
Answer & Explanation
Answer: C) 3710.29
Explanation: i=j/m
n =m(Term) = 2(15.5) =31
Fair market value Present value of the face value
=FV(1+ i)^-n
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