Which of the Following Statements Defines a Strip Bond

question 70

Multiple Choice

Which of the following statements defines a strip bond?

• A)Stripped payments from the principal and sold at a premium.
• B)Stripped coupons from the principal and sold separately at a discount.
• C)A bond that has a much longer term to maturity, and therefore lower present value.
• D)A bond that pays interest regularly but maintains its face value in the market.

---

Definitions:

Enforceable

A legal term referring to a contract or agreement that can be upheld and compelled by law.

Parol Evidence Rule

A legal principle that prevents parties from using oral or extrinsic evidence to contradict or vary the terms of a written contract.

Condition Precedent

In contract law, an act or promise that must take place or be fulfilled before the other party is obligated to perform his or her part of the agreement.