Answered: what should be the number of years to…

Business

Finance

what should be the number of years to maturity? Round the year to two decimal places. Assume the par value is $1,000.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 4P

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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

Question

A Treasury STRIPS is just sold at $600. If its yield to maturity is 9.90 percent, what should be the number of years to maturity? Round the year to two decimal places. Assume the par value is $1,000.

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