Zero Coupon Bonds

What is it? Bonds that are sold at a significant discount to their face value. They pay no interest, but you receive the full value of the bond when it reaches maturity. The yield is calculated by taking the difference between the purchase price and the face value and figuring in the years to maturity. Issued by corporations, municipalities, and the federal government, zeroes provide a predictable return for investors who want a lump sum of money by a specific date.

Added By: Zachary

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