Treasury STRIPS
An acronym for 'separate trading of registered interest and principal securities'. Treasury STRIPS are fixed-income securities sold at a significant discount to face value and offer no interest payments because they mature at par. Investopedia Says:
Backed by the U.S. government, STRIPS, which were first introduced in 1985, offer minimal risk and some tax benefits in certain states, replacing TIGRs and CATS as the dominant zero-coupon U.S. security.
Although you receive no tangible income, you typically still have to pay federal income tax on the bond's accretion for the year. Related Terms:
Accretion
Certificate of Government Receipts (COUGRs)
Certificates of Accrual on Treasury Securities - CATS
Face Value
Government Security
Spot Rate
Treasury Bond
Treasury Investment Growth Receipts - TIGRs
Treasury Note
Zero-Coupon Bond |