Financial Definition of Zero Coupon Bond
Meaning of Zero Coupon Bond
Such a debt security pays an investor no interest. It is sold at a discount to its face price and matures in one year or longer.
Legal Definition of Zero Coupon Bond
A bond that pays no interest but is priced, at issue, at a discount from its redemption price.
Related Entries of Zero Coupon Bond in the Encyclopedia of Law Project
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Zero Coupon Bond in Historical Law
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Legal Abbreviations and Acronyms
Search for legal acronyms and/or abbreviations containing Zero Coupon Bond in the Legal Abbreviations and Acronyms Dictionary.
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United States Tax Concept of Zero Coupon Bond
Zero-coupon bonds are bonds priced at a large discount from face value. The difference between the purchase price and the face value is your interest. If you buy a zero-coupon bond, every year as it gets closer to maturity the bond increases in value. You pay tax annually on this increase in value, which you recognize as interest income.