Question

1/3 Bank strips treasury bonds. It has taken a 7-year bond with a market price of $1,066.66 and sold off each annual coupon and the principle. The aggregate value of selling each year's cash flows (strips) will:

		slightly exceed the original price of the Treasury bond.
		equal the original price of the Treasury bond.
		be cancelled due to stricter Dodd Frank Wall Street Reform and Consumer Protection Act.
		none of the above.

Answer 1

7 Year Bond Purchased now at a Market Price of $ 1,066.66.

And sold it annual coupon rate along with principal leads after 7 year to equal price of treasury bond.

So option b is correct “equal the original price of treasury bond”