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Strip bond
A security that represents the principal of a bond whose interest coupons were detached in order to trade the bond and the coupons separately, as standalone securities.
A strip bond is a zero-coupon bond. It is traded at a value that reflects the fact no periodic interest payments are made.
Synonyms and variations
- PO strip 2.
- Principal strip
- Principal-only strip 2.
- Stripped bond