Zero coupon bond
WordNet
noun
(1) A bond that is issued at a deep discount from its value at maturity and pays no interest during the life of the bond; the commonest form of zero-coupon security
WiktionaryText
Noun
zero-coupon bond
- A bond (e.g., corporate debenture or government debt) that has no coupon (i.e., pays no interest), during the life of the issue. Such a bond is initially sold at a deep discount to its face value. The rate of return to the holder is derived from the gradual appreciation as the security moves toward maturity.