A security where the interest payments and the principal payments are sold separately is called:
A)a Treasury note.
B)an accretion.
C)a structured note.
D)a stripped security.
E)None of the options is correct.

Question

Quizplus · Accepted Answer

A stripped security is a bond that has been separated into its principal and interest components and sold separately. The principal component is known as a Treasury STRIP (Separate Trading of Registered Interest and Principal of Securities), while the interest component is known as a Treasury coupon. This allows investors to purchase either the principal or interest payments separately, depending on their investment objectives.

A Security Where the Interest Payments and the Principal Payments