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LOS c: Describe how stripped Treasury securities are created and distinguish between coupon strips and principal strips.
Q1. Which of the following statements about the taxation of separate trading of registered interest and principal of securities (STRIPS) is FALSE?
A) Implicit interest taxation is a paramount issue for pension plans.
B) The STRIPS program began in 1985.
C) Treasury STRIPS can be based upon either coupon payments or principalpayments.
Q2. Which of the following statements about Treasury securities is FALSE?
A) The U.S. Treasury auctions 10-year Notes weekly.
B) Designated government securities dealers can buy treasuries, strip out the coupons and principal, and reissue these stripped cash flows as zero-coupon bonds.
C) Taxable investors holding zero-coupon bonds can have negative cash flows prior to maturity.
Q3. Which of the following statements regarding separate trading of registered interest and principal of securities (STRIPS) is TRUE? A 20-year Treasury bond can be used as the basis for:
A) 40 principal strips and 1 coupon strip.
B) 41 coupon strips.
C) 40 coupon strips and 1 principal strip.
Q4. Which of the following refers to the U.S. Treasury bonds that are sold in the form of zero-coupon securities?
A) Treasury calls.
B) Strip-Ts.
C) Pass-throughs.
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发表于 2009-3-2 16:19
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