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Zero coupon bonds

Zero coupon bonds

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

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Unique to the UK, these funds pool together money to invest from multiple investors.

Maturity value

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Spot Rate

The currency exchange rate a bank quotes, valid with immediate effect.

Junk Bond

A form of debt investment that carries higher risk because of the likelihood that the issuer will default.

Free Trade

The other free trade. International trade in which countries allow goods to flow across their borders without imposing import or export taxes.

Volatility

A measure of how much the prices of an asset or index vary over time.

Quick ratio

Learn what quick ratio stands for in financial terms and how to calculate it.

Running yield

The annual interest payment (dividend) divided by the current market price of a bond.

Year to Date (YTD)

A period of time that starts with the first day of the current calendar year and ends with today.

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