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Financial Terms / Y - Z / Zero-Coupon Bond

Zero-Coupon Bond

A Zero-Coupon Bond is a bond that pays no interest during its lifetime but trades at a discount to its face value. On maturity, the bond's full face value is realized , and the difference between the discounted price you bought the bond for and the final face value of the bond at maturity (or when you sell) is your profit/interest for holding the bond.

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