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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: steve in socal who wrote (8146)	8/11/1999 4:44:00 PM
From: JZGalt	Respond to of 18928

Steve, It won't work quite the same way. Since govt bonds are not callable, the govt is going to have to go out in the market and pay a premium to redeem those shares. I haven't done the math, but the capital gain on the premium of who sell will be quite steep. They might have to pay $2 to get $1 worth of face value in the bonds. So my guess is the formula looks something like this: "surplus" = ( premium paid - face value ) * number of bonds / (1 - capital gains tax rate)