Glossary BG Image

Interest-only strip (IO)

Browse Terms By Number or Letter:
Financial Terms By: i
Interest-only strip (IO)

A security based solely on the interest payments from a pool of mortgages, Treasury bonds, or other bonds. Once the principal on the mortgages or bonds has been repaid, interest payments stop, and the value of the IO falls to zero.

Copyright © 2018, Campbell R. Harvey. All Worldwide Rights Reserved. Do not reproduce without explicit permission.