What is 'Zero coupon bonds'? | Freetrade Dictionary

Zero coupon bonds

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

Xetra

A trading venue operated by the Frankfurt Stock Exchange.

Beta

Learn what Beta stands for in finance.

Quantitative easing

Find out what quantitative easing is and how central banks use this monetary measure to encourage economic growth.

Nominal amount

The face value of a gilt. It represents the amount that will be repaid to the holder at maturity and is also used to calculate the dividend or coupon payment.

Zero coupon bonds

What is a zero coupon bond?

Volatility

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

Diversification

An investment strategy in which money is put into a variety assets.

Global Investment Performance Standards (GIPS)

A set of standards which investors use to present their investment results.

Rate of Return

Profit on an investment, expressed as a percentage of the investment.

You’re just minutes away from commission-free investing

open an isa

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).