Just a little confusion here. I thought that there is no such a thing as a Treasury zero bond and that is why STRIPS allows investment bankers to create a zero coupon bond based on the number of coupon payments (and principal at maturity) from the coupon paying treasury bonds and notes right? I just see questions here and there about calculating treasury zero-coupon bond. Can someone clarify this? Thanks in advance
The US government does not issue zero coupon bonds with maturities beyond 1 year. The couponless shorter ones: 1, 3 and 6 months are called T bills, while the ones over 1 year are with coupon and called T notes. T zero-coupon bonds are (likely) the STRIPS you mentioned earlier.
Also, Zero-coupon bonds have been issued by municipalities since the 80s, but they are not T bonds
that’s what I thought. Thanks for the clarification