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zero-coupon bond


Definitions from WordNet

Noun zero-coupon bond has 1 sense
  1. zero coupon bond - a bond that is issued at a deep discount from its value at maturity and pays no interest during the life of the bond
    --1 is a kind of zero-coupon security; bond, bond certificate

Definitions from the Web

Term: Zero Coupon Bond


A zero coupon bond is a type of bond that does not pay periodic interest payments, but is instead sold at a discount and redeemed for its face value at maturity.


Sense 1:

Part of Speech: Noun

Definition: A financial instrument that is issued at a discounted price and does not pay regular interest, but instead provides a return on investment through the difference between the purchase price and the face value when it matures.

Sample Sentence: The investor purchased a zero coupon bond for $500, and when it reached maturity, she received $1,000.


Usage 1: Investment

Part of Speech: Noun

Definition: The act of buying zero coupon bonds as an investment strategy to earn a fixed return at maturity.

Sample Sentence: Many financial advisors recommend including zero coupon bonds in investment portfolios to diversify risk.

Usage 2: Debt Financing

Part of Speech: Noun

Definition: The use of zero coupon bonds by corporations or governments to raise capital without having to make ongoing interest payments.

Sample Sentence: The government issued zero coupon bonds to fund a large infrastructure project without increasing the annual debt payment obligations.

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