Maturity Price Maturity Price Feb 2020 97.123 Feb 2023 90.066 Feb 2021 94.770 Feb 2024 87.528 Feb 2022 92.424 Feb 2025 85.410 14. Treasury STRIPS (LO3, CFA1) Calculate the quoted yield for each of the STRIPS given in the table above. Does the market expect interest rates to go up or down in the future? 15. Treasury STRIPS (LO3, CFA1) What is the yield of the February 2021 STRIPS expressed as an EAR? 16. Forward Interest Rates (LO3, CFA3) According to the pure expectations theory of interest rates, how much do you expect to pay for a one-year STRIPS on February 15, 2020? What is the corresponding implied forward rate? How does your answer compare to the current yield on a one-year STRIPS? What does this tell you about the relationship between implied forward rates, the shape of the zero coupon yield curve, and market expectations about future spot interest rates? Maturity Price Maturity Price Feb 2020 97.123 Feb 2023 90.066 Feb 2021 94.770 Feb 2024 87.528 Feb 2022 92.424 Feb 2025 85.410 14. Treasury STRIPS (LO3, CFA1) Calculate the quoted yield for each of the STRIPS given in the table above. Does the market expect interest rates to go up or down in the future? 15. Treasury STRIPS (LO3, CFA1) What is the yield of the February 2021 STRIPS expressed as an EAR? 16. Forward Interest Rates (LO3, CFA3) According to the pure expectations theory of interest rates, how much do you expect to pay for a one-year STRIPS on February 15, 2020? What is the corresponding implied forward rate? How does your answer compare to the current yield on a one-year STRIPS? What does this tell you about the relationship between implied forward rates, the shape of the zero coupon yield curve, and market expectations about future spot interest rates