principal-only strip

Definition

A version of a stripped mortgage-backed security which has cash flows that are based entirely on the monthly principal payments received from a mortgage pool. Investors tend to buy principal-only strips when they suspect that interest rates are about to decline, because the principal will be paid at a faster rate.

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You may want to try and take on a principal-only strip if you think that will be the best way for you to proceed.

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The principal-only strip confused me a lot and my friend knew it, so he tried to tell me about it as best he could.

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The principal-only strip was the best choice for the investors who thought that interest rates were likely to decline soon

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principal-agent relationship interest-only strip