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URL:  http://boards.fool.com/i-think-strips-give-you-a-slightly-better-yield-30296203.aspx

Subject:  Re: STRIPs and TINTs Date:  10/2/2012  8:02 PM
Author:  trader2012 Number:  34436 of 35383

I think STRIPS give you a slightly better yield for the same time frame than the actual note/bond.

Black,

Actually, the differences are even more subtle than that. As the data sets below suggest, it makes a difference whether the derivative in based on 'interest' or 'principal', and whether the notes/bonds are ‘on the run’ or ‘off the run’. But the differences make sense. More implied-risk = more yield.

Charlie
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TYPE CPN DUE YTM
int 0.000 02/15/20 1.167
prin 0.000 02/15/20 1.116
note 3.625 02/15/20 1.080
bond 8.500 02/15/20 1.022

int 0.000 05/15/20 1.231
prin 0.000 05/15/20 1.176
note 3.500 05/15/20 1.132
bond 8.750 05/15/20 1.068

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