STRAPS Definition

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STRAPS is Stated Term Rate Auction Preferred Stock; issues having a fixed dividend rate, usually for three to five years. After this period, the security becomes an auction-rate preferred and the holder can sell the stock at par on the date of the first auction. STRAPs trade like and are com­pared to a short-term sinking fund preferred stock.

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SIGNIFICANT RISK is an identified and assessed risk of material misstatement that, in the auditor's judgment, requires special audit consideration.

ADVANCE is an amount paid before it is earned, e.g. payment ahead of actual expenditures or phase completion of a construction project.

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