/

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.

‍

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.

‍

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

‍

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

More terms

Interest Rate

The amount a lender charges for lending your money, or a borrower pays you for borrowing your money.

Equity ETF

An exchange-traded fund that is comprised of a set of stocks.

Leverage

A method of trading using borrowed money that usually involves a very high level of risk.

Base rate

What's the base rate?

Hypothesis Testing

A mathematical test used to determine whether a claim is true or false.

Synthetic ETFs

An ETF that that reproduces the return of an index through the use of swaps.

Yield to maturity (YTM)

What is yield to maturity and why is it useful?

Custodian bank

Learn what a custodian bank is.

Gilt

What is a gilt?

You’re just minutes away from commission-free investing

When you invest, your capital is at risk

Freetrade does not provide investment advice and individual investors should make their own decisions or seek professional advice. The value of investments can go down as well as up and you may receive back less than your original investment. Freetrade is a trading name of Freetrade Limited, which is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales (no. 09797821).

© 2026 Freetrade, All rights reserved. The Apple logo is a trademark of Apple Inc. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.