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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

Arithmetic Mean

The sum of a set of numbers added together and then divided by the total amount of numbers in that set.

Quick ratio

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

Forward pricing

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Yield curve

A graphical representation of interest rates over time

Maturity date

The date on which a gilt is redeemed and the gilt holder receives the repayment of the nominal amount and final dividend or coupon payment.

Custodian bank

Learn what a custodian bank is.

LSE

London Stock Exchange, which was founded in 1571 and now has a market cap of almost $5 trillion.

Annualised Rate of Return

The average annual return an investor sees over a set period of time.

Net Asset Value (NAV)

The value of a company's assets relative to the number of shares it has.

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