If the Value of a Treasury Bond Was Higher Than

question 2

Multiple Choice

If the value of a Treasury bond was higher than the value of the sum of its parts (STRIPPED cash flows) , you could

• A) profit by buying the stripped cash flows and reconstituting the bond.
• B) not profit by buying the stripped cash flows and reconstituting the bond.
• C) profit by buying the bond and creating STRIPS.
• D) not profit by buying the stripped cash flows and reconstituting the bond and profit by buying the bond and creating STRIPS.
• E) None of the options are correct.

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A measure of the density of a substance compared to the density of water.

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