What is Zero Coupon?
Zero Coupon A debt security that does not pay periodic interest but is issued at a discount to its face value and matures at par, providing return through capital appreciation.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Zero Coupon” Used in Practice?
Zero coupon bonds are sensitive to interest rate changes and are frequently used for liability matching in pension funds.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Zero Coupon?
A debt security that does not pay periodic interest but is issued at a discount to its face value and matures at par, providing return through capital appreciation.
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