Stripped Coupons are interest payment coupons detached from government bonds. Residuals are the bonds without their interest coupons. Both are sold as individual investments known as "Strips". Strips are always sold at a discount and mature at face value. The longer the term to maturity, the deeper the discount. The difference between the purchase price and the face value is your interest income. Like all bonds, you know exactly how much your investment will be worth at maturity and how much income you will earn.
Fixed Income | Choosing Investments | TD Direct Investing
A strip bond is created from existing conventional bonds by separating each of the coupon payments as well as the principal payment the residual , from one another. Once stripped, each coupon and the residual can trade as a separate security, allowing the holder to receive a single known payment on a specific date also known as a "zero coupon" bond. The Fund is managed based on the philosophy that it is both impractical and financially prohibitive to fully replicate an index in pursuit of market returns. The Fund uses stratified sampling to efficiently achieve index-like returns.
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