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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (62066)	6/11/1999 12:34:00 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

John, Both are zeroes. When you strip a real bond and turn it into zeroes, you have two portions, the principal and the interest payment. With the CI, you are buying the stream of coupon payments over the lifetime of the bond, but you are not receiving the coupon payments every year. With the BP, you are buying the principal at maturity. In reality, there isn't a heck of a lot of difference between them as you are discounting some future cash payout. For whatever reason, the public tends to like the BPs better, so I tend to buy the coupons. but the yield spread is not all that great. Both are full faith and credit of the US Govt. at maturity.