Glossary of Municipal Securities Terms

ZERO COUPON BOND

An original issue discount bond on which no periodic interest payments are made but which is issued at a substantial discount from par, accreting (at the rate represented by the offering yield at issuance) to its full value at maturity. See: COMPOUND ACCRETED VALUE; ORIGINAL ISSUE DISCOUNT; ORIGINAL ISSUE DISCOUNT BOND. Compare: CAPITAL APPRECIATION BOND; CURRENT INTEREST BOND.

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