Q: I enclose a copy of a certificate my husband and I received as a bonus when buying into a time-share vacation plan. Since the maturity date is Aug. 15, 2009, and we are both in our late 50s, should we have the beneficiary changed to my granddaughter, or at least to someone younger than we are? Is there any real value to this certificate? We have shown it to several people and they don't even recognize this type of certificate.

A: What you enclosed is a copy of a Certificate of Accrual on Treasury Securities. CATS are issued by Salomon Brothers; other bankers and brokers issue the same type of security under other names, like Merrill Lynch's TIGRs (Treasury Income Growth Receipts).

These are simply stripped Treasury bonds. That is, the sponsor separates the individual interest "coupons" from the underlying security, then sells each coupon separately. The interest payment itself thus in effect becomes a "zero-coupon" obligation of the U.S. Treasury, eligible only for a one-time payment on the selected maturity date.

What you have is a single regular semi-annual interest payment of $1,000 on a 12 1/2 percent Treasury bond due Aug. 15, 2014. Neither the rate nor the eventual maturity date of the bond has any real significance -- you own only the interest payment due Aug. 15, 2009, in the amount of $1,000.

Yes, it does have some value -- right now it's worth a little less than $100. It will increase in value (assuming no drastic change in market interest rates) pretty steadily until it reaches its maturity value of $1,000 in 2009. And that introduces a problem. Like any other taxable zero-coupon bond, each year you are required to report as ordinary interest income the accruing increase in value. (This has been called "phantom" interest because you don't actually receive it but must report it anyway.)

There is no specified beneficiary on a CATS -- to give it to your granddaughter, you would have to ask the transfer agent to reissue the certificate in her name. Giving it to your granddaughter as a gift might be a pretty good idea. (I assume she's young and has little or no other tax liability.) The small increase in value each year is hardly worth the hassle of reporting it on your tax return.

Q: Four years ago, my husband and I bought a home. We obtained a conventional loan of $57,950 at 16 1/4 percent, with an assurance that we could refinance if interest rates fell. Since the VA rate is now 12 percent, we are considering applying for a VA refinance loan -- but we also are wondering about the advisability of refinancing at all. By the time we pay points and the various other refinancing charges, our closing costs could easily run to $5,000 or $6,000. In your opinion, other than having a more attractive assumable loan for resale, is there any real advantage to refinancing now?

A: I can only give you a simplistic answer; to do otherwise would require more information than you provided in your letter, plus more calculations than would fit here.

On the basis of cash flow alone, the monthly payment on your present loan (principal and interest only, not including escrow payments for taxes and insurance) should be around $905. The monthly payment on the same size mortgage at 12 percent would come to around $640.

So the difference in cash outflow would be $265 a month. If your total closing costs add up to $5,000, it will take you 18 or 19 months to recoup the closing costs from the monthly cash savings.

This oversimplified answer gives you an idea of how to work out the numbers to see if refinancing is advantageous. But you would have to factor into the equation such things as the difference in tax deductions generated by the larger versus the smaller payment, and the time value of money (like the income lost on the amount of the closing costs until they have been recouped).

Personal elements, such as how long you expect to continue living in the house, also must be considered. As a rather broad rule, it usually pays to refinance if you expect to live in the house for at least three years and the difference between the old and the new rates is at least 3 percentage points.