Question

What is a “zero-coupon bond”?

What is a "zero-coupon bond"?

Answer 1

A zero-coupon bond is a type of bond that is sold at a discounted price and does not pay interest during its term. Instead, the bondholder receives the full face value of the bond when it matures. The difference between the purchase price and the face value of the bond represents the investor's return. Zero-coupon bonds are also known as discount bonds and are often used in retirement planning, estate planning, and other long-term investment strategies.

Answer 2

A zero-coupon bond is a type of bond that pays no periodic interest payments but is sold at a discount to its face value. It provides a return through the difference between the purchase price and the face value when it matures.

Answer 3

A zero-coupon bond is a debt security that does not pay regular interest payments like traditional bonds. Instead, zero-coupon bonds are sold at a discount to their face value and the investor receives the full value at maturity. The return on investment comes from the difference between the discounted purchase price and the face value received at maturity.

Answer 4

A zero-coupon bond is a type of bond that does not pay periodic interest payments. Instead, it is sold at a discount to its face value and provides a return only upon maturity, when the bondholder receives the full face value.

Answer 5

A zero-coupon bond is a bond that does not pay interest until maturity. Instead, the investor pays a discounted price for the bond and receives the full face value at maturity.