STRIPS are used effectively to receive

A. One set of payment

B. Two sets of payments

C. Three sets of payments

D. Four sets of payments

Answer: Option A

Solution(By Examveda Team)

STRIPS are used effectively to receive one set of payment. STRIPS (Separate Trading of Registered Interest and Principal of Securities) are debt securities that are created through the process of coupon stripping. They are essentially traditional Treasury bonds, except that the bond's principal (its corpus) has been separated--stripped--from its interest (its coupon).