Zero coupon bonds: Also known as a Zero, a debt security which pays no interest ('coupon') but instead is traded at a discount (which generally decreases over time), rendering profit at maturity when the bond is redeemed for its full face value. Also known as a 'deep discount bond' (referring to the significant discount at the time of issue). Some zero-coupon bonds are issued as such, while others are created by financial institutions stripping out the coupon (which is traded separately as a 'strip') from a regular bond and and repackaging it a zero-coupon bond. Zeros are usually traded at a discount that decreases as the instrument approaches maturity and do not pay any interest.


Zero coupon bonds in our glossary: terms and definitions

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Zero coupon bonds at assetman.net

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