Zero coupon bond
Zero coupon bond is a bond that pays no coupons at all but is offered at a substantial discount below its par value and hence provides capital appreciation rather than interest income.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Zero coupon bond. Pays no coupons at all but is offered at a substantial discount below its par value and hence provides capital appreciation rather than interest income.
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Zero coupon bonds. Bonds that pay no annual interest but are sold at a discount below par, thus compensating investors in the form of capital appreciation.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
