Business and Personal Finance Dictionary

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• ZERO COUPON BOND
  
  A bond that has no coupon payments. It pays only a single cash flow at maturity. May be taxable outside a qualified retirement vehicle. Usually high quality federal or government bonds originally issued in bearer form, where some or all of the interest coupons have been detached. The bond principal and any remaining coupons trade separately from the strip of detached coupons, both at substantial discounts from par. Also called strip bonds.
  
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