| a bond that has been stripped into its principal certificate and interest coupons, each part to be sold separately. |
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 Commentary
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 Links
Bond Basics Tutorial
Advanced Bond Concepts
Corporate Bonds: An Introduction To Credit Risk
Advantages Of Bonds
See also: Bond, Coupon, Debt, Par Value, Principal, Zero-Coupon Bond