What is a Zero Bond?

[ankita]

I recently came across the term zero bond and wanted to understand it better. From what I gather, it’s a type of bond issued at a discount and redeemed at face value without periodic interest payments. Can someone explain how zero bonds work, their benefits, and whether they’re a good investment option?

 

[Gsusangrey]

A zero-coupon bond, or zero bond, is a debt security sold at a deep discount to its face value. It pays no periodic interest. Instead, the investor receives the full face value upon maturity, with the profit being the difference.

 

[brook]

A zero-coupon bond (zero bond) is a security issued at a deep discount at the point of issue to their face value. It is paying no periodic interest Rather, the investor gets the pure face value at the end of the maturity and the profit is the difference.

 

[nikhilrajoria]

It is a discount bond that does not pay an interest charge, and investors receive profit upon maturity at face value (or a zero-coupon bond).