Stripped bond

Stripped bond

Bond that can be subdivided into a series of zero-coupon bonds.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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.
Under regulations effective after August 7, 1991, the discount is disregarded if it is less than 1/4 of 1% (.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.
Stripped federal government securities have many different names, depending on the investment banker that "manufactures" the stripped bond, including:
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.g., a person who receives it as a gift) (see Q 1136).
Under regulations effective after August 7, 1991, the discount is disregarded if it is less than Vi of 1% (.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.
Under this ruling, when a loan is sold and the servicing rights are retained, the loan must be treated as a "stripped bond" under Sec.
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.
Complex debt instruments include debt instruments that provide for more than one rate of stated interest (such as those with stepped interest rates); convertible debt instruments; stripped bonds or coupons; debt instruments that require payment of either interest or principal in a non-U.S.-dollar currency; certain tax credit bonds; debt instruments that provide for a payment-in-kind feature; debt instruments issued by a non-U.S.
Some types of discounted debt instruments include corporate bonds, municipal bonds, certificates of deposit, stripped bonds, and collateralized debt obligations.
91-46 holds that where mortgage servicing is retained at an amount that is deemed to be in excess of reasonable compensation for the services to be performed (i.e., excess servicing), the mortgages are "stripped bonds" within the meaning of Code Section 1286(e) (2), the bond coupon stripping rule.
Complex bonds mainly include physical certificates, foreign debt, stripped bonds, convertible bonds and bonds with more than one interest rate.