zero-coupon bond (Meaning)
Synonyms & Antonyms of zero-coupon bond
No Synonyms and anytonyms found
zero-coupon bond Sentence Examples
- A zero-coupon bond, also known as a deep discount bond, pays no interest payments over its lifetime.
- The return on a zero-coupon bond comes solely from the difference between its purchase price and its maturity value.
- Zero-coupon bonds are typically issued at a deep discount to their face value, making them attractive to investors seeking long-term capital appreciation.
- The yield to maturity of a zero-coupon bond is the internal rate of return (IRR) that equates the present value of its future cash flows to its current price.
- Zero-coupon bonds are often used to create synthetic floating-rate loans or to hedge interest rate risk.
- The price of a zero-coupon bond is highly sensitive to changes in interest rates, especially as it approaches maturity.
- Investors should carefully consider the risks associated with zero-coupon bonds, such as reinvestment risk and default risk.
- Zero-coupon bonds can be used as a tool for tax-deferred retirement savings through instruments like the Zero Coupon Bond Fund.
- Some zero-coupon bonds are backed by government agencies or corporations, providing investors with added security.
- The secondary market for zero-coupon bonds is less liquid than the market for other types of bonds, which can impact their liquidity and price stability.
FAQs About the word zero-coupon bond
No synonyms found.
No antonyms found.
A zero-coupon bond, also known as a deep discount bond, pays no interest payments over its lifetime.
The return on a zero-coupon bond comes solely from the difference between its purchase price and its maturity value.
Zero-coupon bonds are typically issued at a deep discount to their face value, making them attractive to investors seeking long-term capital appreciation.
The yield to maturity of a zero-coupon bond is the internal rate of return (IRR) that equates the present value of its future cash flows to its current price.
