Zero Coupon Bond
Definition
Zero Coupon Bond. Bond issued with a coupon rate of zero and at a deep discount to face value
A zero coupon bond carries a carries a coupon rate of zero and is issued at a steep discount to face value. At maturity it is redeemed at full face value. Over time the outstanding principal amount accretes at a constant accrual rate. In effect, the accrual rate is the coupon rate or yield which is added to the outstanding principal rather than being paid out to investors.
Synonyms
- Z-Bond
Disclaimer
This entry annotates a FIBO Ontology Class. FIBO is a trademark and the FIBO Ontology is copyright of the EDM Council, released under the MIT Open Source License. There is no guarantee that the content of this page will remain aligned with, or correctly interprets, the concepts covered by the FIBO ontology.
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