Treasury STRIPS

AAA

DEFINITION of 'Treasury STRIPS'

An acronym for 'separate trading of registered interest and principal securities'. Treasury STRIPS are fixed-income securities sold at a significant discount to face value and offer no interest payments because they mature at par.

INVESTOPEDIA EXPLAINS 'Treasury STRIPS'

Backed by the U.S. government, STRIPS, which were first introduced in 1985, offer minimal risk and some tax benefits in certain states, replacing TIGRs and CATS as the dominant zero-coupon U.S. security.

Although you receive no tangible income, you typically still have to pay federal income tax on the bond's accretion for the year.

RELATED TERMS
  1. Spot Rate

    The price that is quoted for immediate settlement on a commodity, ...
  2. Note Auction

    A formal bidding process that is scheduled on a regular basis ...
  3. Accretion

    1. Asset growth through addition or expansion. 2. In reference ...
  4. Zero-Coupon Bond

    A debt security that doesn't pay interest (a coupon) but is traded ...
  5. Certificates Of Accrual On Treasury ...

    Issued by the U.S. Treasury and stripped by a financial intermediary, ...
  6. Certificate Of Government Receipts ...

    U.S. Treasury fixed-income securities that are stripped of their ...
Related Articles
  1. Getting To Know The Money Market
    Options & Futures

    Getting To Know The Money Market

  2. Bond Basics Tutorial
    Retirement

    Bond Basics Tutorial

  3. How long are credit ratings valid?
    Bonds & Fixed Income

    How long are credit ratings valid?

  4. Is the Social Security trust fund solvent?
    Retirement

    Is the Social Security trust fund solvent?

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center