2021. You are provided with information about the yields of Treasury Bonds paying on coupons...
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2021. You are provided with information about the yields of Treasury Bonds paying on coupons and Treaty STRIPS Zero Coupon bonding. Testy na procedimides de You plan to borrow a 2 year loan beprogona year from now. January 2022. Assume that short selings of Treasury coupon bonds and Treasury STRIPS are allowed Exhibit 1 On-the-run yield curve on Treasury annual coupon bonds Pure yield curve on Treasury Maturity (years) (YTM) STRIPS 1 0.040% 0.040% 2 0.065% 0.067% 3 0.110% 0.113% 4 0.285% 0.290% 5 0.430% Maturity (years) 1 5 6 9 14 Exhibit 2 Coupon rates 1.25% 3% 0.75% 2.50% 2% Treasury Indexed Bonds (YTM) -1.435% -1.310% -1.050% -0.745% -0.445% A friend suggested that you can borrow at a negative interest rate based on the negative yields displayed in Exhibit 2. Comment on your friend's suggestion
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