You bought 10-year treasury notes (t-notes) of $100,000,000 face value from the money you won from a lottery 6 years ago. Now, you want to sell your t-notes (with 4 years until maturity) on 11/30/2020 because you want to settle an outstanding financial obligation. You friend, a finance major, suggests that you should sell your bonds in the market that offers the highest present value for the expected stream of income between the spot bonds market and the STRIPS bonds market. Given the market information below, calculate the value of your bonds in both the STRIPS market and the spots bonds market. Would you profit from STRIPPING this Treasury Note? (N.B: Your bond now has 4 years until maturity. Also recall that treasury instruments like t-notes pay coupon semi-annually). U.S. Treasury (hypothetical Data) at as 19 NOVEMBER 2020 Spot Market (Market 1) COUPON (%) PRICE YIELD CHG 10-Year Note 1.625 99.415 0.000 7-Year Note 1.425 98.012 0.000 11/30/2024 1.235 97.742 0.000 11/30/2023 1.175 97,451 0.000 11/30/2022 1.05 97.345 0.000 10/15/2021 0 96.972 0.000 04/15/2021 0 96.878 0.000 12/15/2020 0 96.241 0.000 11/15/2020 0 95.873 0.000 Bid Asked Asked yield Maturity Bid Stripped Principal (Market 2) 15-Nov-20 98.404 98.384 2.34 98.154 2.464 31-May-21 20-Apr-21 97.904 98.363 98.142 98.031 30-Nov-21 97.654 2.588 2.712 2.836 31-May-22 97.443 30-Nov-22 97.193 Hypothetical U.S Treasury STRIPS Prices and Yields 19 November 2020 Asked Asked yield Maturity Stripped Interest (Market 3) 98.456 2.28 15-Nov-20 98.226 2.401 13-May-21 97.996 2.522 20-Apr-21 97.766 2.643 30-Nov-21 97.536 2.764 31-May-22 97.306 2.885 30-Nov-22 97.083 3.006 20-Dec-22 96.853 3.127 31-May-23 96,618 3.248 20-Apr-23 96.388 3.369 30-Nov-23 96.158 3.49 20-Dec-23 95.945 3.611 31-May-24 95.715 3.732 31-Nov-24 95.484 3.853 15-Apr-25 95.254 3.974 15-Oct-25 98.381 98.166 97.916 97.692 97.477 97.227 96.974 96.724 96.471 96.221 2.96 96.940 96.735 20-Dec-22 31-May-23 20-Apr-23 30-Nov-23 97.92 97.789 97.688 97.557 97.446 97.325 97.204 3.084 3.208 3.332 3.456 96.485 96.235 20-Dec-23 95.964 96.045 95.832 31-May-24 3.58 3.704 95.759 97.083 31-Nov-24 95.58 95.474 3.828 15-Apr-25 95.321 95.259 96.962 96.841 96.72 15-Oct-25 95071 3.952 4,076 95.009 You bought 10-year treasury notes (t-notes) of $100,000,000 face value from the money you won from a lottery 6 years ago. Now, you want to sell your t-notes (with 4 years until maturity) on 11/30/2020 because you want to settle an outstanding financial obligation. You friend, a finance major, suggests that you should sell your bonds in the market that offers the highest present value for the expected stream of income between the spot bonds market and the STRIPS bonds market. Given the market information below, calculate the value of your bonds in both the STRIPS market and the spots bonds market. Would you profit from STRIPPING this Treasury Note? (N.B: Your bond now has 4 years until maturity. Also recall that treasury instruments like t-notes pay coupon semi-annually). U.S. Treasury (hypothetical Data) at as 19 NOVEMBER 2020 Spot Market (Market 1) COUPON (%) PRICE YIELD CHG 10-Year Note 1.625 99.415 0.000 7-Year Note 1.425 98.012 0.000 11/30/2024 1.235 97.742 0.000 11/30/2023 1.175 97,451 0.000 11/30/2022 1.05 97.345 0.000 10/15/2021 0 96.972 0.000 04/15/2021 0 96.878 0.000 12/15/2020 0 96.241 0.000 11/15/2020 0 95.873 0.000 Bid Asked Asked yield Maturity Bid Stripped Principal (Market 2) 15-Nov-20 98.404 98.384 2.34 98.154 2.464 31-May-21 20-Apr-21 97.904 98.363 98.142 98.031 30-Nov-21 97.654 2.588 2.712 2.836 31-May-22 97.443 30-Nov-22 97.193 Hypothetical U.S Treasury STRIPS Prices and Yields 19 November 2020 Asked Asked yield Maturity Stripped Interest (Market 3) 98.456 2.28 15-Nov-20 98.226 2.401 13-May-21 97.996 2.522 20-Apr-21 97.766 2.643 30-Nov-21 97.536 2.764 31-May-22 97.306 2.885 30-Nov-22 97.083 3.006 20-Dec-22 96.853 3.127 31-May-23 96,618 3.248 20-Apr-23 96.388 3.369 30-Nov-23 96.158 3.49 20-Dec-23 95.945 3.611 31-May-24 95.715 3.732 31-Nov-24 95.484 3.853 15-Apr-25 95.254 3.974 15-Oct-25 98.381 98.166 97.916 97.692 97.477 97.227 96.974 96.724 96.471 96.221 2.96 96.940 96.735 20-Dec-22 31-May-23 20-Apr-23 30-Nov-23 97.92 97.789 97.688 97.557 97.446 97.325 97.204 3.084 3.208 3.332 3.456 96.485 96.235 20-Dec-23 95.964 96.045 95.832 31-May-24 3.58 3.704 95.759 97.083 31-Nov-24 95.58 95.474 3.828 15-Apr-25 95.321 95.259 96.962 96.841 96.72 15-Oct-25 95071 3.952 4,076 95.009