zero coupon bond

Noun.  (finance) A bond (e.g., corporate debenture or government debt) that has no coupon (i.e., pays no interest), during the life of the issue. Such a bond is initially sold at a discount to its face value. The rate of return to the holder is derived from the gradual appreciation as the security moves toward maturity.

This is an unmodified, but possibly outdated, definition from Wiktionary and used here under the Creative Commons license. Wiktionary is a great resource. If you like it too, please donate to Wikimedia.

This entry was last updated on RefTopia from its source on 3/20/2012.