Skip to content

NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities

In the context of Government securities, what is the main feature of a Separate Trading of Registered Interest and Principal of Securities (STRIPS)?

STRIPS separate each coupon and the principal of a Government security into individual zero coupon securities that can be held and traded separately in demat form, rather than splitting face value or converting into equity.

  1. AEach cash flow of a security is separated and traded as an individual zero coupon securityCorrect
  2. BThe security is converted into equity shares of the issuer
  3. CThe bond is split into smaller face values with the same coupon
  4. DThe principal is waived and only interest is paid

Explanation

STRIPS are created by separating the coupon and principal payments of a eligible G-Sec into individual zero coupon securities, each of which can be held and traded separately in demat form. They do not involve conversion into equity or waiver of principal.

Did you get it right without looking?

One question tells you little. A timed set on Special Services - Debt Instruments and Government Securities shows your real accuracy, how long you take and where you lose marks.

Practise Special Services - Debt Instruments and Government SecuritiesFree diagnostic mock

More Special Services - Debt Instruments and Government Securities questions