No. of Recommendations: 2
Generally, zero-coupon bonds (of any type and from any issuer) offer a slight yield-premium over their couponed counterparts of comparable credit-quality and maturity. Obviously, the fact that one can reinvest actual coupons might more than make up for their small difference in projected YTM, just as, sometimes, zeros are the better way to go, depending on one’s capital and intentions.

Anyhow, I was poking around in Treasuries just now, trying to see what is action is, and it can be observed that Treasury strips offer a YTM premium over conventional T-notes/ T-bonds that ranges from a quarter-point to three-eighths of a point. Also, there’s a yield difference that differs depending on whether the principal or the interest has been stripped.

It’s way too early to be buying right now. But it’s never too early to gain some familiarity with the territory, so that when the buying time does come, the easy part of the homework has already been done
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.