Business Definition for: accrual bond
Related Terms:
mortgagebacked certificates representing separated principal and interest components of the underlying mortgages.
Bonds: brokerage-house practice of separating a bond into its corpus and coupons, which are then sold separately as zero-coupon securities. The 1986 Tax Act permitted municipal bond strips. Some, such as Salomon Brothers' tax-exempt M-CATS, represent prerefunding backed by U.S. Treasury securities held in escrow. Other strips include Treasuries stripped by brokers, such as TIGERS, and stripped mortgage- backed securities of government-sponsored issuers like Fannie Mae. A variation known by the acronym STRIPS (Separate Trading of Registered Interest and Principal of Securities) is a prestripped zerocoupon bond that is a direct obligation of the U.S. Treasury.
Options: option contract consisting of two put options and one call options on the same underlying stock or stock index with the same strike and expiration date. Compare with strap.
Stocks: to buy stocks with the intention of collecting their dividends. Also called dividend stripping. See also dividend rollover plan.
Referring Terms:
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