Zero-Coupon Bond

A bond that, instead of paying interest, is sold at a deep discount. You get the face value at maturity, and the difference between the two is the yield. Mostly these are Treasury securities. Zeros, as they are known, have some advantages: you can buy one today that matures when you child is ready for college and know exactly how much money you will have. Zeros pay slightly higher interest than regular bonds, too. But you have to pay taxes on ""imputed"" interest -- money you don't collect until you redeem the bond.



Investing terms and definitions starting with
Numbers A B C D E F G H I J K L M N O P Q R S T U V W Q Y Z




Copyright 2021