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Zero coupon bonds

Zero coupon bond

What is a zero coupon bond?

A zero coupon bond is a bond that does not make interest payments.

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This type of bond is issued at a discount to its maturity value and is redeemed at the maturity value, generating a return for the investor.

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UK Treasury bills are an example of a zero coupon bond.

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Zero coupon bonds can be issued by governments, municipalities, and companies.

More terms

DMO

The United Kingdom Debt Management Office. It’s an executive agency responsible for managing the government’s debt and cash needs, primarily through issuing gilts and Treasury bills.

Packaged Retail and Insurance-based Investment Product (PRIIP)

An investment where, regardless of its legal form, the amount repayable to the retail investor is subject to fluctuations.

Base rate

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Internal Rate of Return (IRR)

A means of calculating the potential future return on an investment.

Capital

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Maturity value

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Venture Capital Trust (VCT)

A listed company run by a fund manager, investing mainly in private companies.e.

Fixed Income

An investment that provides a fixed rate of return, often over a specific set of time.

Investment Return

The amount of money made or lost from an investment. Usually expressed as a percentage.

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