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A Treasury note carries a fixed 4.5% annual coupon rate and matures in 2.5 years. It is currently priced at $50,000 par value to yield

A Treasury note carries a fixed 4.5% annual coupon rate and matures in 2.5 years. It is currently priced at $50,000 par value to yield 4.5% at maturity. Assume you can buy the bond and strip the coupons and final principal payment and sell each of them as a zero-coupon security. Given the following zero coupon rates determine the price of each item, the total price for all the sales, and explain if this transaction would be beneficial to you or not.

Maturity 6-month 12-month 18-month 24-month 30-month

Zero-coupon yield 4% 4.2% 4.4% 4.6% 4.8%

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