Strip Bond

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DEFINITION of 'Strip Bond'

A bond where both the principal and regular coupon payments--which have been removed--are sold separately. Also known as a "zero-coupon bond."

INVESTOPEDIA EXPLAINS 'Strip Bond'

An investment firm will usually buy a debt instrument and "strip" it into its separate parts. Strip bonds usually trade at a discount and mature to par value.

RELATED TERMS
  1. Par Value

    The face value of a bond. Par value for a share refers to the ...
  2. Semi-Annual Bond Basis - SABB

    A conversion metric to compare rates on bonds with varying characteristics. ...
  3. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  4. Bond

    A debt investment in which an investor loans money to an entity ...
  5. Principal

    1. The amount borrowed or the amount still owed on a loan, separate ...
  6. Coupon

    The interest rate stated on a bond when it's issued. The coupon ...
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