Zero coupon bonds | Practical Law

Zero coupon bonds | Practical Law

Zero coupon bonds

Zero coupon bonds

Practical Law UK Glossary 4-107-5813 (Approx. 3 pages)

Glossary

Zero coupon bonds

A type of debt security that does not pay any interest during its life. Instead, a zero coupon bond is issued at a discount to its face (or par) value. At maturity, the bondholder receives the full face value of the bond. The difference between the face value and the initial discounted purchase price is known as the original issue discount.