SIE practice questionmediumTreasury Securities - STRIPS
What is one benefit of investing in Treasury STRIPS?
- ALower price volatility
- BHigher coupon rates than T-bonds
- CTax-free income
- DKnown payment at maturity with no reinvestment risk✓ Correct answer
Explanation
Why D — Known payment at maturity with no reinvestment risk
STRIPS offer a single payment at maturity, eliminating reinvestment risk. They do not have higher coupons, are not tax-free, and have higher—not lower—volatility.
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