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  1. Financial concepts

Zero Coupon Bonds

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Last updated 2 years ago

A bond is a fixed-income instrument that represents a loan made by an investor to a borrower. A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments.

A zero-coupon bond (ZCB) does not pay interest but instead trades at a deep discount, rendering a profit at maturity, when the bond is redeemed for its full face value.

The majority of this content was pulled from and modified to better serve Arbor users. We thank for providing these educational materials.

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