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(1) The highly leveraged common stock remaining after a leveraged buyout or other recapitalization. The stub's value is affected by the issuance of debt to replace much of the original common stock. The stub is difficult to evaluate except as an option on the firm. (2) An interim period at the beginning or end of a swap or other periodic reset agreement which is of nonstandard length. For example, a two-month stub at the end of a quarterly reset swap. Also called Back Stub Period, Front Stub Period. (3) The ex-warrant bond originally issued with a detachable warrant. (4) A package of three consecutive one-month LIBOR contracts used to create a synthetic three-month Eurodollar position on the Chicago Mercantile Exchange. See also Pack, Bundle.
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