A newly-issued eighteen-year Treasury security can be stripped into __________ separate zero coupon securities.

Question

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A newly-issued eighteen-year Treasury security can be stripped into thirty-seven separate zero coupon securities, each with a maturity of one year. This is because stripping a bond means separating its interest and principal payments into individual securities, and as the original bond has 18 years to maturity, it can be stripped into 18 principal payments and 18 interest payments, resulting in a total of 36 separate securities. However, each of these securities has a duration of one year, so there are actually 37 separate zero coupon securities that can be created.

A Newly-Issued Eighteen-Year Treasury Security Can Be Stripped into __________