A bond (e.g., corporate debenture or government debt) that has no coupon (i.e., pays no interest), during the life of the issue. Such a bond is initially sold at a deep discount to its face value. The rate of return to the holder is derived from the gradual appreciation as the security moves toward maturity
(Finans) A zero-coupon bond (also called a discount bond or deep discount bond) is a bond bought at a price lower than its face value, with the face value repaid at the time of maturity. It does not make periodic interest payments, or have so-called "coupons," hence the term zero-coupon bond. Investors earn return from the compounded interest all paid at maturity plus the difference between the discounted price of the bond and its par (or redemption) value. Examples of zero-coupon bonds include U.S. Treasury bills, U.S. savings bonds, long-term zero-coupon bonds, and any type of coupon bond that has been stripped of its coupons
A bond that pays no interest throughout its life Zero Coupon Bonds (Zeros) sell at a discount to maturity value The discount represents the return on the original investment, if the bond is held to its maturity date The bonds are usually created using interest payment dates of a regular issue
A bond which pays no periodic interest, but simply returns a given amount of principal at a stated maturity date Zero coupon bonds are sold at a discount from the maturity amount to provide the holder a compound rate of return for the holding period
A bond which does not pay out interest in cash, but instead re-invests it All bonds once had detachable coupons to be sent along with interest payments; thus zero interest payment came to be called "zero coupon"
A bond where no periodic interest payments are made The investor receives one payment - at maturity The maturity value an investor receives is equal to the principal invested plus interest earned, compounded semiannually, at the original interest rate to maturity
An IOU ("certificate") that sells for much less than it's stated value Though no interest is paid, the debt gradually increases in value until it is paid back at full value
A bond that is originally issued at a deep discount from its par or face amount and which bears no current interest The bond is bought at a discount price which implies a stated rate of return calculated on the basis of the bond being payable at par at maturity (See Capital Appreciation Bond )