Investment Analysis Final (Ch15 so far...)

Stripped treasuries are

zero-coupon bonds created by selling each coupon or principal payment from a whole treasury bond as a separate cash flow

Pure yield curve

The relationship between yield to maturity and time to maturity for zero-coupon bonds

On-the-run yield curve

Relationship between yield to maturity and time to maturity for newly issued bonds selling at or near par velue

Under certainty, the yield on the zero 2-year coupon bonds is greater than that on the 1-year zero. Why?

This upward sloping curve is evidence that short term rates are going to be higher next year than they are now.

The yield to maturity on zero-coupon bonds is called the

Spot rate

The short rate refers to ____.

The interest rate for that interval available available at different points in time (a one period interest rate)