The treasury security in which the final principal payment is separated from periodic interest payment is classified as ___________?
Correct answer: A. STRIP
- A. STRIP
- B. separated security
- C. inflated security
- D. coupon paid security
Explanation
A STRIP separates a Treasury security’s principal from its periodic interest payments, allowing each cash flow to be traded separately. The name refers to Separate Trading of Registered Interest and Principal Securities.
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