Zero coupon bonds maturity date

zero coupon bonds maturity date

Such bonds are referred to as zero coupon bonds.
The greater the dream woman wanted youtube length of time until the bond matures, the less the investor pays for it, and vice versa.The imputed interest on the bond is subject to income tax, according to the Internal Revenue Service (IRS).The investors earn a return in the form of coupon payments made annually or semi-annually throughout the life of the bond.Most zero coupon bonds trade on the major exchanges.What is a 'Zero-Coupon Bond a zero-coupon bond is a debt security that doesn't pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.These bonds are issued at a deep discount and repaid the par value at maturity.A zero-coupon bond is also known as an accrual bond.If the debtor accepts this offer, the bond will be sold to the investor at 20,991 / 25,000 84 of the face value.The difference between 20,000 and 6,757 (or 13,243) represents the interest that compounds automatically until the bond matures.With the bond's deep discount, an investor can put up a small amount west sussex local news of money that can grow over many years.The 80 return plus coupon payments received on the bond is the investor's earnings or return for holding the bond.
When the bond matures, the bondholder is repaid an amount equal to the face value of the bond.

These long-term maturity dates can allow an investor to plan for a long-range goal, such as paying for a childs college education.