Matures Strips -

: Investors use STRIPS to match the maturity date exactly with a future financial obligation.

: A standard bond is "stripped" into its principal repayment and its individual interest (coupon) payments. matures strips

: Each resulting strip becomes a zero-coupon bond , meaning it does not pay periodic interest but is instead sold at a deep discount to its face value. : Investors use STRIPS to match the maturity

: Even though no cash interest is paid until maturity, the annual increase in the strip's value is often taxed as "phantom income" unless held in a tax-deferred account like an IRA. Strategic Use Cases they carry minimal default risk

: Because they are backed by the U.S. Treasury, they carry minimal default risk, though they are highly sensitive to interest rate changes before they mature.