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Zero coupon bond

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Updated: Aug 20, 2021

A bond that does not make any periodic coupon payments. A zero coupon bond is sold at a discount from its face value but pays the face value at maturity. For example, a zero coupon bond with a face value is determined by the discount. For the example, £909 invested in the bond is rewarded with the face value of £1000 a year later, which is an annual return of 10 per cent. See also stripped bond. Of 10 per cent. See also stripped bond.

Reference: Oxford Press Dictonary of Economics, 5th edt.


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James Knight
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James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.