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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

Zero coupon bonds

What is a zero coupon bond?

Compound interest

Understand what compound interest means and how it's calculated

Custodian bank

Learn what a custodian bank is.

Accounting standards

The rules a company follows when preparing financial statements.

Gilt

What is a gilt?

Annualised Rate of Return

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

Coupon

Also called a dividend, this is the fixed annual interest paid to gilt holders. It’s usually paid in two equal, semi-annual instalments and expressed as a percentage of the nominal value of the gilt.

Rate of Return

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

Earnings per share

We look at what earnings per share mean and how to calculate it

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