Treasury STRIPS are most similar to which type of corporate security?
A)preferred stock
B)premium bond
C)high-yield bond
D)zero-coupon bond

Question

Quizplus · Accepted Answer

Treasury STRIPS are actually zero-coupon bonds that are created by "stripping" the coupons and principal payments from the underlying Treasury securities. This means that Treasury STRIPS pay no periodic interest and are instead sold at a discount to face value, with the investor receiving the full face value at maturity. Zero-coupon bonds are the most similar type of corporate security to Treasury STRIPS, as they also do not pay interest and are issued at a discount to face value.

Treasury STRIPS Are Most Similar to Which Type of Corporate