Talk:Zero-coupon bond

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Definition

And what is a Zero-coupon bond? The article doesn't seem to say. ---mav

It's a bond that pays no coupon. It is a discount bond, which means you pay less than par for it, and redeem it at par. The difference between the price and the par value of the bond makes up for the interest owed to the bondholder. Finnancier 12:54, 1 July 2007 (UTC)[reply]

And what is a coupon? I don't see a definition or link, at least early in the article (I stopped reading after not having a clear idea what the term meant). 2600:1702:4170:2B30:6934:89A6:FDF1:624 (talk) 05:35, 23 October 2020 (UTC)[reply]

History

I took out the history section. All it said that "This market was started in 1982" (??!!). I don't know how you could say when this market started but a more detailed history of the modern market might be interesting.

According to IMC definition a zero coupon bond is not exactly the same as a deep discount bond (which has a low rather than zero coupon). This is an important distinction and seems to be eroneously represented here. —Preceding unsigned comment added by 82.44.81.250 (talk) 23:19, 20 November 2008 (UTC)[reply]

Not clear

not unble to get the exact mechanism. Can any one clarify how issuer gains from these bonds

To the issuer, these bonds are no different from a regular bond: in fact, they're the same bond. So the mechanism basically (very basically) is this: Someone buys the bond from the issuer, then re-sells the coupons to one party and the stripped part to another.

Because the bondholder buys the bond at a discount, the issuer has to pay the par value at redemption. Finnancier 12:54, 1 July 2007 (UTC)[reply]

Merge to Bond (finance) ????

Somebody put on a merge tag to merge this into the general bonds article, but hasn't bothered explaining or starting a discussion anywhere.

Absolutely disagree - this strikes me as logical as merging Cleveland Indians into Baseball, except that when it comes down to it zero coupons are much more important than the Cleveland Indians. Smallbones (talk) 22:41, 17 November 2007 (UTC)[reply]

Disagree - Yeah, a merge is a bad idea. Zero-coupon bonds can and should stand on their own. If the tag's still there in a week I'll probably remove it. -FrankTobia 16:02, 30 November 2007 (UTC)[reply]

I got tired of waiting, and removed the merge tags. We can re-open the discussion if anyone objects. -FrankTobia 17:18, 3 December 2007 (UTC)[reply]

Example that really is an example.

The article currently doesn't indicate that zero coupon bonds exist which started out as coupon bonds that subsequently got stripped. It only allows that bonds which never had any coupons but only a maturity value can be zero-coupon. I tried to remedy this but was reverted. I'm adding it back because the rationale for the reversion was nonsense. --198.49.180.40 (talk) 22:27, 2 October 2008 (UTC)[reply]

I think you forgot to click "Save" 99.163.50.12 (talk) 23:50, 10 October 2008 (UTC)[reply]

confusing definition of strip bonds

This is the first time I have used this facility, so apologies in advance for any breaches of etiquette.

The article says "The coupons and residue are sold separately to investors. Each of these investments then pays a single lump sum. This method of creating zero coupon bonds is known as stripping and the contracts are known as strip bonds"

Three questions: 1. Are you saying that all of the contracts resulting from the process of stripping are called strip bonds?

2. Are you also saying with the 'single lump sum' phrase that the bond is never stripped into just 2(or more) parts - the residue, and the income stream that is defined by the totality(or arbitrary subsets) of the coupon payments i.e. are you saying there must be a separate contract created for each coupon payment when a bond is split?

3. It seems the residue is financially equivalent to a zero-coupon bond, so why give it a different name? Closd (talk) 15:24, 18 December 2008 (UTC)[reply]

Assessment comment

The comment(s) below were originally left at Talk:Zero-coupon bond/Comments, and are posted here for posterity. Following several discussions in past years, these subpages are now deprecated. The comments may be irrelevant or outdated; if so, please feel free to remove this section.

Some body has asked what benefit the issuer of Zero Coupon Bond will get. One of the benefits is that these bonds are issued for a long term and the issuer of this bond will minimize the Interest rate risk. Please respond if you feel this is correct to my email ID shadaab.mahdi@db.com, smahdi12@yahoo.co.in,

Substituted at 18:47, 17 July 2016 (UTC)