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Question
A two-year STRIPS sells at an interest rate of 3.84 percent and a three-year STRIPS sells at a rate of 3.97 percent. What is the implied one year interest rate two years from now? Assume the rates are effective annual rates.A. 4.23 percent
B. 4.36 percent
C. 4.41 percent
D. 4.45 percent
E. 4.50 percent
Answer
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Which one of the following statements regarding an original issue $25,000 GNMA bond is correct?
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