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Zero-coupon Bond
- Definition Definition: A bond that doesn't pay interest but is sold at a deep discount. The investor profits from the bond going up in value (kind of like a stock). Characteristics:
Zero coupon bonds are sometimes
issued as such or sometimes they're actual interest-bearing bonds
that have been stripped of their interest and repackaged as no-interest
bonds by financial institutions. They are sold at a deep discount
and are usually known to be quite volatile.
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