1. A U.S. Treasury bond that has exactly 18 months remaining to maturity has a 5% coupon rate, and it pays coupons semiannually. The bond is currently selling to yield 5%. The face value of the Treasury bond is $1,000.

   Three U.S. Treasury STRIPS with maturities of 6 months, one year, and eighteen months are currently selling at the following yields (yields are annualized, but are based on semiannual compounding):

   Strip Maturity Strip Yield

   6 months 4%

   12 months 5%

   18 months 6%

   You want to duplicate the cash flows from the 5% coupon Treasury bond, using STRIPS. Which of the following statements is the least accurate?

   	a.	The current price of 18-month STRIP per $1 face value is $0.915.
   	b.	The face value amount of the 18-month STRIP you need to purchase is $1,000.
   	c.	The face value amount of the 6-month STRIP you need to purchase is $50.
   	d.	The price you pay to replicate the coupon in 12 months is $47.59.