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Separate Trading of Registered Interest and Principal Securities (STRIPS)

Definition:

Long-term notes and bonds divided into principal and interest-paying components, which may be transferred and sold in amounts as small as $1000. STRIPS are sold at auction at a minimum par amount, varying for each issue. The amount is an arithmetic function of the issue's interest rate.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Stock buyback

A corporation's purchase of its own outstanding stock, usually in order to raise the company's earnings per share.

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