What is a Treasury Security with Separated Principal and Interest?

1 FINANCE MCQS

A Treasury security where the final principal payment is separated from periodic interest payments is called ____________?

STRIP
Separated security
Inflated security
Coupon paid security

Correct Answer: A. STRIP

Detailed Explanation

A STRIP (Separate Trading of Registered Interest and Principal Securities) is a type of U.S. Treasury security where the principal payment is separated from the interest payments. This allows each component to be sold individually as zero-coupon securities. STRIPS are commonly used for long-term investment and are backed by the U.S. government.

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A Treasury security where the final principal payment is separated from periodic interest payments is called ____________?

A Treasury security where the final principal payment is separated from periodic interest payments is called ____________?

Detailed Explanation

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In cash flow analysis, two projects are compared using a common life approach, which is classified as…

In capital budgeting, the Internal Rate of Return (IRR) of a project is classified as its ____________?…

In evaluating independent projects, the results of Internal Rate of Return (IRR) and Net Present Value…