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How do investors make money on zero-coupon bonds?

In: Bonds and Treasuries, Coupons [Edit categories]

Answer:

The bond sells at a discount from its face value--sometimes a BIG discount. At the date of maturity, the bond will give you the full face value.

First answer by Jmowreader. Last edit by Jmowreader. Contributor trust: 1118 [recommend contributor ]. Question popularity: 1 [recommend question].

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What are zero-coupon debentures or bonds?
A zero coupon bond pays no interest. Thus the market price for such a bond is always LESS than the maturity (face) value. The amount by which the bond is priced below its maturity value is known as...
What is a Zero coupon bond?
A bond that does not pay interest until the point in time when it reaches maturity.
How does an investor make money from an investment?
An investor can make money in two ways: dividend: a cash amount that is distributed to everyone who owned company shares on a certain date price appreciation: this is when an investor sells their...
How are investors in zero coupon bonds compensated for making such an investment?
They are sold at discount and mature to face value over time.
Why do people like zero coupon bonds?
Zero coupon bonds are sold at a price well below face value. Thus, these bonds are appealing to the small investor because they can be bought far more cheaply than ordinary debt obligations. The...