SIE Exam Practice Question 970

Question: 970

Which of the following is correct regarding the taxation of Treasury STRIPS?

A. Tax must be paid on accrued interest each year even though no interest is received by the investor.

B. Tax is not paid on accrued interest each year because no interest is received by the investor.

C. Tax must be paid at maturity only.

D. Treasury STRIPS are not taxed.