Zero-coupon Security (Noun)
Meaning
A security that makes no interest payments but instead is sold at a deep discount from its face value.
Classification
Nouns denoting possession and transfer of possession.
Examples
- Companies often issue zero-coupon securities to raise funds without incurring ongoing interest expenses.
- The investor purchased a zero-coupon security at a lower price, expecting it to mature at face value in a few years.
- Investors looking for low-risk investments often turn to zero-coupon securities due to their simplicity and predictability.
- The long-term strategy of the portfolio focused on investments in low-risk zero-coupon securities.
- Zero-coupon securities typically have higher liquidity risk due to the absence of regular interest payments to investors.