Stripped bond

Stripped bond

Bond that can be subdivided into a series of zero-coupon bonds.

Strip Bond

A bond, especially a U.S. Treasury security, that is traded separately from its coupons such that it pays no interest. Strip bonds are sold at a significant discount from par and mature at par. They fluctuate in price, sometimes dramatically, because changes in interest rates make them more or less desirable. They can be placed in IRAs and other pension accounts; however, unlike other Treasury securities, they are subject to federal taxes. Generally speaking, strip securities are quoted according to their yields rather than their prices. In 1985, the U.S. Treasury began issuing its own strip bonds, called STRIPS, which replaced other vehicles, such as CATS and TIGRS, that had been issued by the Treasury and stripped by another party.
References in periodicals archive ?
After Connery's initial departure, editor-turned-director Peter Hunt stripped Bond of his excesses and explored his humanity in "On Her Majesty's Secret Service," the most personal and tragic 007 adventure.
0025) of the amount so payable multiplied by the full number of years from the date the stripped bond or coupon was purchased to final maturity.
If a strip is called before maturity--which is more likely to occur when interest rates have fallen--the investor will generally not be able to reinvest the proceeds at the yield to maturity he enjoyed on the stripped bond.
The debt instrument is a stripped bond or a stripped coupon.
3) Discount must also be included in income as it accrues on a stripped bond or stripped coupon held by the person who stripped the bond or coupon or by a person whose basis is determined by reference to the basis in the hands of the person who stripped the bond or coupon (e.
1286 treats the holder of a stripped bond (or coupon) as if the holder purchased a newly issued debt instrument with OID.
91-49 provided a simplified method of reporting gain for loan sales when the annual stated rate of interest payable on the stripped bond is no more than 100 basis points lower than the annual stated rate of interest payable on the original loan.
This means that cost basis for trades in physical certificates, foreign currency debt, foreign debt, convertible bonds, stripped bonds, payment-in-kind bonds, bonds with more than one rate and some private issues will now be reported to the IRS.
91-46 indicated that amounts received under a mortgage-servicing contract were interest payments for stripped bonds if (1) the amounts exceeded reasonable compensation for services and (2) the mortgages were sold at the time the mortgage-servicing contract was entered into.