A zero-coupon bond doesn't pay interest to the holder. Zero-coupon bonds are purchased at a deep discount to face value but they're repaid at full face value or par at maturity.

Zero-Coupon Bond Pricing Example. If an investor wanted to make 5% imputed interest on a zero-coupon bond with a face value of $15,000 that matures in four years, how much would they be willing to ...

For example, if you buy a zero-coupon bond with a face value of $10,000 and a 10-year maturity at a discount price of $6,500, you’ll get back your $6,500 principal plus $3,500 in profit when the ...

A zero-coupon bond does not pay coupons or interest payments like a typical bond does; instead, a zero-coupon holder receives the face value of the bond at maturity.

Price of Zero-Coupon Bond = $10,000 / (1.025) ^ 20 = $6,102.77. With semiannual compounding, we see the bond offered at an initially deeper discount than if imputed interest were to compound annually.

Looking for investments offering predictable long-term returns, zero-coupon bonds might be a good choice. But what is a zero coupon bond, and how do they work?

Pricing of a Zero Coupon Bond Suppose that a corporation needs to raise some quick capital. Management decides to release bonds with five-year maturity terms at a par value of $1,500.

For example, you might pay $5,000 for a zero-coupon bond with a face value of $10,000 and receive the full price, $10,000, upon maturity in 20 or 30 years. Zero-coupon CDs work the same way.

Zero-coupon bonds live in the investing weeds, easily ignored by ordinary investors seeking growth for college and retirement. Should ordinary investors take a look? How do they tend to do in ...

Zero coupon bonds are taxed differently because they don't pay regular interest. ... For example, an investor might purchase a zero coupon bond for $700 that will pay $1,000 at maturity.

PFC withdraws zero-coupon bond issuance for the second time in weeks as investor demand remains weak due to yield concerns ...

In contrast, with a zero coupon bond with a face value of $100, paying 3%, you buy the bond for $74.41. You then wait 10 years, and at the end of those 10 years, the company pays you $100.