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.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Debt Securities questions
- A bond is structured so that the investor can force the issuer to redeem early at predetermined dates. This feature is…
- What does duration measure in relation to a bond?
- Which is a disadvantage of zero-coupon bonds?
- Which statement about the Government National Mortgage Association (GNMA) is correct?
- CMOs are structured with tranches to:
- A 5% bond matures in 10 years and is selling for 92. What does the yield to maturity (YTM) indicate as compared to…
- A bond with a rating of BBB by S&P would be considered:
- Which of the following is TRUE of both Treasury notes and Treasury bonds?