Calculate the costs of treasury strips

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Reference no: EM131959530

Analyze the following questions concerning zero coupon bonds.

a. Show examples of how zero coupon bonds are important in bond pricing and evaluate (giving pros and cons of) the reasons that zero coupon Treasuries are made (Treasury STRIPS), since they are not directly issued.

b. Calculate the costs of Treasury STRIPS made from a $100,000, 5-year Treasury with a 2.67% coupon rate. Show your work.

Reference no: EM131959530

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