zero-coupon bond

Definition

Bond that (1) pays no interest but instead is sold at a deep discount on its par-value, or (2) an interest paying bond that has been stripped of its coupon which is sold separately as a security in its own right. Bondholder's income is determined by the difference between the bond's redemption value on maturity and its purchase price. Also called non-interest bearing Bond, zero interest bond, or zero rated bond. See also deep discount bond.


zero-coupon bond is...

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