A split coupon bond combines a zero coupon bond with a regular coupon bond.

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A split coupon bond, also known as a "stripped coupon bond," involves dividing a regular coupon bond into two separate parts: a zero coupon bond and a coupon bond. The zero coupon bond is sold at a discount and does not pay interest, while the coupon bond pays periodic interest payments based on its stated coupon rate. So, the split coupon bond combines both elements of a zero coupon bond and a regular coupon bond.

A Split Coupon Bond Combines a Zero Coupon Bond with a Regular