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Interest Only Strip

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Interest Only Strip
A derivative security whose cash flow derives exclusively from interest payments on various debt securities. That is, the underlying asset of an interest-only strip is interest paid on debt securities, rather than the debt securities themselves. Many interest only strips are backed by mortgage interest, but some are also backed by Treasury securities and other debt securities. Interest-only strips are derived from bonds whose coupons are legally separated, or "stripped", from the bonds themselves.


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org/), formerly the National Association of Securities Dealers ("NASD"), involved allegations of misrepresentation and omission of investments in Collateralized Mortgage Obligations ("CMOs") and CMO Interest Only strips ("I/Os").
Then on April 19, 2005, the Company announced that it had determined that "it is appropriate to correct the methodology used to calculate the fair value of its portfolio of floating rate interest only strips ("IOs").
Dan Phillips also stated that "The company will continue to monitor and manage its shareholders' residual interests in the company's interest only strips and continue to move forward with its accounting and SEC compliance initiatives.
 
 
 
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