Exam (elaborations)
Fixed Income Securities Test 2 (Answered) Complete Solution
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Assume you purchased Treasury bond on November 14, with an annual coupon rate equal to 15%. At settlement you must pay accrued interest equal to $2.51. Assuming there are 182 days in a coupon period, how many days were in the AI period? Coupon of 15% = $15 per $100 of par Coupon interest per day = 15 / 364 = .0412 $2.51 / .0412 = 61 days Which of the following statements is FALSE? - all coupon treasury security can be created STRIPs - Treasury STRIPs were created due to demand for long term zero coupon with no credit risk - Treasury strips are uniquely attractive to US investors due to their preferential tax treatment False = Treasury strips are uniquely attractive to US investors due to their preferential tax treatment
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Institution
Fixed Income Securities
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Fixed Income Securities
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assume you purchased treasury bond on november 14
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