Government Bonds
Regarding this exam topic, Treasury STRIPS are:
Treasury STRIPS are NOT issued directly by the Treasury. They are created when broker-dealers "strip" Treasury notes or bonds into their individual interest and principal components. Each component then trades as a separ
Complete Analysis & Legal Rationale
Treasury STRIPS are NOT issued directly by the Treasury. They are created when broker-dealers "strip" Treasury notes or bonds into their individual interest and principal components. Each component then trades as a separate zero-coupon security. STRIPS are taxable at the federal level.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Does not match the governing securities rule described in the explanation.
Matches the verified teaching point in the explanation.
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Official Standard: Primary reference for Treasury bills/notes/bonds/STRIPS characteristics (verify current Treasury materials).
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.