Treasury STRIPS Are Most Similar to Which Type of Corporate

question 71

Multiple Choice

Treasury STRIPS are most similar to which type of corporate security?

• A)preferred stock
• B)premium bond
• C)high-yield bond
• D)zero-coupon bond

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Definitions:

Shorter-Duration Bonds

Bonds with a near-term maturity date, typically less sensitive to interest rate changes and offering less yield compared to longer-duration bonds.

Yield To Maturity

The total return anticipated on a bond if it is held until its maturity date, including all interest payments and the repayment of principal.

Bond's Duration

Bond's duration measures the sensitivity of the bond's price to changes in interest rates, often indicating the average time it takes for a bond to repay its true cost.

Price Volatility

The rate at which the price of a security increases or decreases for a given set of returns, representing the risk of price change.