Notices

Zero Coupon Bond

From Traderpedia

Definition:
A debt security which pays no intermediate interest payments, but rather accrues interest over time with a full pay-out at maturity.


Zero Coupon Bonds are discounted securities like T-Bills, though zero coupons are generally of longer maturity, at least initially.

Some zero coupon bonds are the result of standard bonds being "stripped" such that each coupon payment and the final principal payment all become seperate discounted securities.