A zero coupon bond is a bond that can be purchased at a discounted price(< face value) and later redeemed at maturity for its face value. The difference in face value minus discounted price can be considered the bond’s “interest” payment.
Common Examples of Zero Coupon Bonds:
T-Bills. Since T-Bills maturity dates don’t exceed 12 months, they pay no interest during their life. However, after being purchased at a discounted price and reaching its maturity date, they spend their face value.
The difference between the Face Value and the Discounted Price can be considered the “Interest.”
Zero coupon bonds, like T-Bills, can create problems with calculating interest rates(yields) so built this quick tool to help me: How To Calculate A T-Bill Yield.
 Myself with an interesting Bull Sculpture. Notice: No Lambo’s. :/ | Hi I’m Tom, A Blogger And A PIG Farmer. PIG Farmer as in I grow Passive Income Generators(PIG’s). I’ve been playing with stocks, mutual funds, and options for decades, as well as always working on my side hustle stacks. Unlike what you read online, I’ve yet to find a way to get rich quickly. Get Rich Quick isn’t happening for me. My journey has been long and continues. I hope to have so many PIGs I can stop working at my current job and volunteer as a medical worker overseas. Still waiting, but getting there. I still am a family man, and while on this Journey of Growing PIGs. I wanted to share my adventures(ups and downs), hoping you will contribute with your feedback and comments. Fun Fact: In my spare time, I am a Band-Dad! |