Treasury STRIPS are
A) tax-exempt bonds.
B) simple loans.
C) discount bonds.
D) fixed payment loans.

Question

Quizplus · Accepted Answer

Treasury STRIPS (Separate Trading of Registered Interest and Principal of Securities) are discount bonds that are created through the process of stripping the interest payments from the underlying Treasury bond. This results in a series of zero-coupon bonds, each with a different maturity date. These bonds are sold at a discount to their face value and do not pay any interest until they mature, making them a popular choice for investors who are looking to lock in a guaranteed rate of return. Treasury STRIPS are not tax-exempt and do not involve simple loans or fixed payment loans.

Treasury STRIPS Are