Final answer:
The yield to maturity (YTM) of the STRIP purchased for $96 with a maturity of 3 years is 4.17%.
Step-by-step explanation:
To calculate the yield to maturity (YTM) of a bond, you need to consider the bond's purchase price, maturity date, and coupon rate. In this case, you bought the STRIP (Separate Trading of Registered Interest and Principal Securities) for $96 with a maturity of 3 years. Since STRIPs pay no interest but are sold at a discount to their face value, the formula to calculate the YTM is:
YTM = (Face Value - Purchase Price) / Purchase Price x (1 / Time to Maturity)
Using this formula, the calculation would be: YTM = (100 - 96) / 96 x (1 / 3) x 100 = 4.17%