Do you pay taxes on Treasury strips?
I'm curious to know, when it comes to Treasury strips, are there any tax implications that investors need to be aware of? Do individuals and entities have to pay taxes on the income or gains derived from investing in these financial instruments? How does the taxation process work, and are there any specific rules or regulations that investors should be mindful of? I'm interested in gaining a better understanding of the tax treatment of Treasury strips to make informed investment decisions.
How are Treasury strips priced?
Could you please elaborate on the pricing mechanism of Treasury strips? I'm curious to understand how the market determines the value of these securities, which are essentially zero-coupon bonds stripped from Treasury bonds. Do they trade similarly to other fixed-income instruments, or are there unique factors that influence their pricing? Additionally, how does the maturity of these strips impact their pricing, and are there any other key considerations that investors should be aware of when valuing Treasury strips?
What are the risks of treasury strips?
Can you please elaborate on the potential risks associated with investing in treasury strips? As an investor, I'm keen to understand the downsides of this type of investment, such as liquidity risks, interest rate risks, and credit risks. Additionally, how do treasury strips compare to other types of fixed-income securities in terms of risk? Are there any specific market conditions that can significantly impact the performance of treasury strips? Thank you for your insights.