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English definition of “zero coupon bond”

zero coupon bond

noun [C]
 
 
( also zero) FINANCE a type of bond that does not pay interest, but that you buy for less than its face value , so that you make a profit when it is paid back: Zero coupon bonds are more sensitive to interest rate changes than bonds that pay interest periodically. Most zeros are still offering returns of over 8%.
(Definition of zero coupon bond from the Cambridge Business English Dictionary © Cambridge University Press)
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