Asked by David thompson on Jun 02, 2024
Verified
A $5,000 face value strip bond may be purchased today for $1073.36 yielding the purchaser 7.27% compounded semiannually. How much time (to the nearest day) remains until the maturity date? Assume that each half-year has exactly 182 days.
Strip Bond
A financial security that represents a portion of the interest or principal of a bond, which has been separated to be sold individually.
Compounded Semiannually
This refers to the process of calculating interest on both the initial principal and the accrued interest from previous periods, done twice a year.
Maturity Date
The specified date on a financial instrument at which the principal (and usually the final interest payment) is due to be paid.
- Learn the process for calculating the duration until a bond matures utilizing compound interest formulas and information related to the bond's purchase.
Verified Answer
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Learning Objectives
- Learn the process for calculating the duration until a bond matures utilizing compound interest formulas and information related to the bond's purchase.