STRIPS: simpler than bonds

To a bond math student, STRIPS (zeros) are always simpler than coupon bonds. A zero-coupon bond, to a bond mathematician, is one single cash inflow at a pre-set time; whereas a coupon bond is a series of periodic payouts, each to be discounted differently to give you the NPV.

To derive the NPV of a coupon bond, you need to add up the NPV of each payout. There’s no clever “silver bullet” to bypass this summation.

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