A bond which pays no coupons, is sold at a deep discount to its face value, and matures at its face value. A zero-coupon bond has the important advantage of being free of reinvestment risk, though the downside is that there is no opportunity to enjoy the effects of a rise in market interest rates. Also, such bonds tend to be very sensitive to changes in interest rates, since there are no coupon payments to reduce the impact of interest rate changes. In addition, markets for zero-coupon bonds are relatively illiquid. Under U.S. tax law, the imputed interest on a zero-coupon bond is taxable as it accrues, even though there is no cash flow.

Related information about zero-coupon bond:

Related information about zero-coupon bond:

**Zero-coupon bond - Wikipedia, the free encyclopedia**

A zero-coupon bond (also called a discount bond or deep discount bond) is a bond bought at a price lower than its face value, with the face value repaid at the ...

**Zero Coupon Bonds**

Mar 29, 2010 ... When a zero coupon bond matures, the investor will receive one lump sum equal to the initial investment plus the imputed interest, which is ...

**Zero-Coupon Bond Definition | Investopedia**

A debt security that doesn't pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.

**Zero-Coupon Bond Definition, Formula & Example | InvestingAnswers**

We explain the definition of Zero Coupon Bond, provide a clear example of the formula and explain why it's an important concept in business, finance ...

**Zero-Coupon Bond - Financial Dictionary - The Free Dictionary**

A bond in which no periodic coupon is paid over the life of the contract. Instead, both the principal and the interest are paid at the maturity date.

**zero-coupon bond - The Free Dictionary**

Noun, 1. zero-coupon bond - a bond that is issued at a deep discount from its value at maturity and pays no interest during the life of the bond; the commonest ...

**Zero Coupon Bond Calculator**

About This Tool. The online Zero Coupon Bond Calculator is used to calculate the zero coupon bond value. Zero Coupon Bond Definition. A zero coupon bond ...

**What is zero-coupon bond? definition and meaning**

Definition of zero-coupon bond: A bond which pays no coupons, is sold at a deep discount to its face value, and matures at its face value. A zero-coupon bond ...