Which of the following entities issues STRIPS as a type of security?

The correct answer, U.S. Treasury, issues STRIPS (Separate Trading of Registered Interest and Principal Securities) as a type of security. STRIPS represent the individual interest and principal components of a U.S. Treasury bond or note, allowing investors to purchase each cash flow separately. This can be particularly attractive for investors looking for specific income streams, such as those who want to match liabilities or seek zero-coupon investment strategies.

When bonds are stripped, the components are treated as distinct securities that can be traded separately in the market. As a result, investors can invest in the interest payments and principal repayment separately, depending on their investment needs and strategies. The U.S. Treasury's issuance of STRIPS adds flexibility to the fixed-income market and caters to various investor preferences.

Other entities, such as FHLMC (Federal Home Loan Mortgage Corporation), GNMA (Government National Mortgage Association), and FNMA (Federal National Mortgage Association), do not issue STRIPS in the same manner as the U.S. Treasury. While these organizations do provide mortgage-backed securities and other types of debt instruments, they do not offer the same stripped securities format as the U.S. Treasury.