Arithmetic Ability
Compound Interest

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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?

View Answer

Correct choice: C

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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