A $10,000 face value, 15-year maturity STRIPS has a quoted price of 38.50. What is its yield-to-maturity?
A) 6.46%
B) 7.53%
C) 8.34%
D) 7.48%
E) 8.39%

Question

Quizplus · Accepted Answer

To calculate the yield-to-maturity, we can use the following formula:
P = F/(1+r)^n
where P is the quoted price, F is the face value, r is the yield-to-maturity, and n is the number of years to maturity.

Plugging in the given values, we get:
38.50 = 10,000/(1+r)^15

Solving for r using a financial calculator or spreadsheet, we get:
r = 7.48%

Therefore, the answer is D, 7.48%.

A $10,000 Face Value, 15-Year Maturity STRIPS Has a Quoted