Home     About Us    Contact Us     Contribute     Privacy
Investing
Stocks
Bonds
Mutual Funds
Biz
Credit
Career
College
Economics
Tax
More
 
 
Marketplace
Related Articles
Related Definitions
Related Categories
Tip of the Day

Tip of the Day Avoid Fees

Avoid Fees - When using long-term investments as a money-earning vehicle, it is wise to remember that any returns that are made on that money must deduct any fees paid...

read entire tip

Recently Added
Other Great Sites
 

Treasury Zero Coupon Bond

U.S. government zero coupon bonds are bonds that do not pay any interest during the life of the bonds. However, the advantage of these bonds is that investors buy zero coupon bonds at a discount from their face value, which is the amount a bond will be worth when it matures or comes due. When a zero coupon bond reaches its end of term (matures), the bond holder will receive one lump sum equal to the initial payment plus the interest.

The maturity dates on zero coupon bonds are usually long-term, and many don't mature for ten, fifteen, or more years. These long-term maturity dates allow an investor to plan for a long-range goal, such as retirement or paying for a child's college education. Because of the discount, an investor can put up a small amount of money that grows over many years.

The prices of zero coupon bonds fluctuate more than other types of bonds because their full value is not received until they mature. No payments are given on zero coupon bonds until they mature, but the investors may still have to pay federal, state, and local income tax on the interest that the bond accrues each year. Instead of making regular interest payments, the value of the bond increases each year because the interest accrues until the zero coupon bond matures at face value, but only if the investor holds the bond until maturity.

If a zero coupon bond is sold before maturity, the investor might gain or lose because the market price could be more or less than the purchase price due to the fluctuation in the amount of interest that has accrued between the time the security was purchased and the sale date.

The current value of a zero coupon bond before maturity will go up or down according to fluctuations in the interest rate. The bond value is inversely related to interest rates because as interest rates rise, the value of the bond will fall and as interest rates fall, the value of the bond will rise. However, if the bond is held until maturity, the return is backed in full by the U.S. Government.

Discuss It!

192.168.1.1|192.168.1.1|192.168.1.1|192.168.1.1 said:

However, if the bond is held until maturity, the return is backed in full by the U.S. Government.

TELANGANA  SSC RESULTS 2016 said:

Telangana State education board has recently released the 10th class or SSC exams schedule for the academic

http://how-rich.org/how-rich-is-mary-mapes/ said:

I expect that the custom blends after this..thumbs up for your work. This substance is surrounded inconceivably well.

australianwritings reliable said:

Thanks teen analyst for sharing about Treasury Zero Coupon Bond here. I have like 3 Treasury Zero Coupon Bond and I don't think I could ever benefit from that, I personally am thinking to get a refund.

hcg drops at http://hcg-drops.com/ said:

Well, this got me thinking what other workouts are good for those of us who find ourselves on the road or have limited equipment options.

free tour stockholm said:

The interest accrues until the zero coupon bond matures at face value, but only if the investor holds the bond until maturity.

avalanche car covers said:

The blog delineates how hard the essayist has taken a shot at this.

seo said:

Indeed, even the words like charming and intriguing can't do full equity with regards to depicting this blog.

contracting company said:

In the wake of perusing this, only one things to state. Out of this world.

http://proactolblog.org/make-use-of-the-melanotan-2-peptide-to-keep-your-skin-glowing said:

Excited by the writer's ability to write in this magnificent way.

http://rewardedessays.portfoliobox.net/home/studying-tips-for-college-students said:

An essential hotspot for the gathering of people that makes the peruser stride by step.

Most Popular Articles
Most Popular Definitions
 
Daily Definition

Definition of the Day Quick Ratio

Definition: A ratio that measures a company's ability to meet its current liabilities with its liquid assets. TeenAnalyst Advice: It's important that a company be able to pay their debts and other ...

read entire definition

 
 

 

 

Home     About Us    Contact Us     Contribute     Sitemap

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Copyright © 2009 TeenAnalyst.com