It Is Important to Remember That the Basic Principle Underlying

question 43

Multiple Choice

It is important to remember that the basic principle underlying bootstrapping is that the value of the Treasury coupon security should be equal to the value of the package of ________ that duplicates the ________.

• A) coupon paying T-Bills; coupon bond's cash flow
• B) zero-coupon Treasury securities; coupon bond's cash flow
• C) coupon paying T-Bills; discount bond's cash flow
• D) zero-coupon Treasury securities; discount bond's cash flow

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Definitions:

Creditor

A party or institution to whom money is owed.

Default

The failure to fulfill an obligation, especially the failure to make payments on a loan.

Exempt Property

Assets that cannot be seized by creditors to satisfy a debt, as defined by law.

Judgment Debt

An obligation arising from a court's final decision requiring a debtor to pay a sum of money to the creditor.