What is zero-coupon bond? definition and meaning - ukomemoxah.cf
Find the product that's right for you. What Is a Zero-Coupon Bond?
Instead, they are issued at a discount to face value and mature at face value. The yield is a function of the purchase price, the face value and the time remaining till maturity. Because zero-coupon bonds provide no cash flow prior to maturity, their duration is equal to their maturity. Coupon-bearing bonds have durations shorter than their maturities.
1) What are Bonds?
The longer duration of a zero means it has more interest-rate sensitivity than a coupon-bearing bond of the same maturity. It will rise in price faster when interest rates are falling, and fall faster when interest rates are rising. Product Features: Access to Jim Cramer's daily blog Intraday commentary and news Real-time trading forums. Uh oh! You're not signed up.
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What is the difference between a zero-coupon bond and a regular bond?
Bond that 1 pays no interest but instead is sold at a deep discount on its par-value, or 2 an interest paying bond that has been stripped of its coupon which is sold separately as a security in its own right. Bondholder's income is determined by the difference between the bond's redemption value on maturity and its purchase price.
Also called non-interest bearing Bond, zero interest bond, or zero rated bond.
See also deep discount bond. Use 'zero-coupon bond' in a Sentence The zero-coupon bond was included in our investment portfolio as we wanted to diversify our investment strategy by including many variations. I realized that a zero-coupon bond would be a good choice, so I decided to go for it and it ended up paying off.
- What is the difference between a zero-coupon bond and a regular bond??
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You can sometimes get a great value on a zero-coupon bond and it can be a great investment if you have the cash for it. Show More Examples. You Also Might Like
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