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From: chu@lasspvax.UUCP (Clare Chu)
Newsgroups: net.invest
Subject: Re: long term investments
Message-ID: <262@lasspvax.UUCP>
Date: Mon, 25-Mar-85 12:40:41 EST
Article-I.D.: lasspvax.262
Posted: Mon Mar 25 12:40:41 1985
Date-Received: Wed, 27-Mar-85 03:14:10 EST
References: <1336@sunybcs.UUCP> <>
Reply-To: chu@lasspvax.UUCP (Clare Chu)
Distribution: net
Organization: LASSP, Cornell University
Lines: 32
Summary: 

In article <> bwm@ccice2.UUCP (Bradford W. Miller) writes:
>
>One type of zero is known as a CAT, or Certificate of Accrual on Treasuries.
>Basically, this uses Treasury bonds to insure that the money you put in will
>be there in 20 years (or whatever the maturity you desire). This is probably
>the safest zero you can buy.
>
>Note that the longer the maturation date (or the higher the interest rate)
>of your zero, the less you must pay for it up front -- this is part of the
>wonder of compound interest! Some price examples:
>
>6% 14years:	$43.71/100
>
>11% 15years:	$20.06/100
>
>14% 20years:	$6.68/100
>
>Some things to remember when buying zeros: They are
>a) relatively illiquid (they are hard to resell).
>b) they are VERY volitile. 
>i.e. if you want to put down $5/1000 for a 40 year 16% zero, do you really
>expect the company or local government project to be there in 40 years) is
>that at maturity you can cash it in for the face value.
>
 
  c)  sure you can cash it in for face value if it is backed by the
      Treasury, but in 40 years how much in real terms is $1000 
      worth?  It might cost $1000 to eat lunch by then!  I know
      most of you think inflation is licked, but you can never
      be too sure...

   Clare