A Treasury note with exactly four years to maturity: a. Can be broken into at most two Treasury STRIPS b. four Treasury STRIPS c. five Treasury STRIPS d. cannot be used to create Treasury STRIPS as only US Treasury Bonds are allowed to be sold as stripped securities. They say the answer is c. I thought T notes pay interest semi annually? That should be 4 years * 2 payments + principal payment = 9 STRIPS It even explains this on page 302 with a diagram. Is this an error?

check the erata

It’s in the errata. Thank you!

What’s erata?

http://www.cfainstitute.org/cfaprog/resources/pdf/L1_Errata.pdf Study Session 15, Reading 64: Practice problem 30 (p. 341) and its solution on p. A-38 did not take into account that Treasury notes pay semiannual interest. Therefore, the correct answer would be that the bond could be broken into nine STRIPS: one for each coupon payment and one for the return of principal.