The basic principle underlying the bootstrapping technique is that the value of the Treasury coupon security should be equal to the value of the package of zero-coupon Treasury securities that duplicates the coupon bond's cash flow.

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Bootstrapping in finance is a method used to construct a zero-coupon yield curve from the prices of a set of coupon-bearing products, such as Treasury bonds. The principle is indeed that the present value of the cash flows from the coupon bond (which includes periodic interest payments and the principal repayment) should be equal to the present value of a series of zero-coupon bonds (each matching the coupon bond's cash flows in amount and timing). This process allows for the determination of zero-coupon rates (spot rates) for various maturities, which are essential for pricing other financial instruments and assessing interest rate risk.

The Basic Principle Underlying the Bootstrapping Technique Is That the Value