Certificate of accrual on treasury securities (CATS)

The certificate of accrual on treasury securities or CATS is a zero-coupon bond that is backed by the U.S treasury and sold at a very cheap price. These certificates are not usually issued by the U.S treasury but most major investment firms do sell them at a discounted rate. Investors of these bonds are not paid coupon interest at a normal interval like most regular bonds but instead, the interests are accumulated and included at the bond's maturity date. Investors are still required to declare them to the IRS as imputed interest annually.

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