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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
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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