If the Value of a Treasury Bond Was Lower Than

question 21

Multiple Choice

If the value of a Treasury bond was lower 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