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    Treasury Bonds

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    The following treasury bond quote appeared in the Financial Times on May 7, 2004:

    9.125 May 09 100:03 100:04 ... -2.15

    Why would anybody buy the Treasury Bond with a negative yield to maturity?
    How is this possible?

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    Solution Preview

    The yield to maturity can be negative if the bond is in high demand. The U.S. Treasury Bond is in high demand these days because everyone wants the security of the U.S. ...

    Solution Summary

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