zero coupon security
- noun
- /ˈziːroʊ ˈkuːpən sɪˈkjʊrɪti/
- Specialized
- When the zero coupon security matures, investors receive the full face amount without any interest payments.
Examples
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A zero coupon security is attractive because it can be purchased at a lower price than its face value.
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At maturity, a zero coupon security pays the investor its full face value.
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A zero coupon security may appeal to those who do not need regular income from their investment.
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Investors often choose zero coupon security for long-term goals like funding college expenses.
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Investing in a zero coupon security can be a smart choice.
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Many investors prefer zero coupon securities for their tax benefits.
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Parents often invest in a zero coupon security to save for their children's future education costs.
Synonyms
1
7.9
An investment sold for less than its full value that pays no interest until it ends
1
7.1
A loan you buy for less than its value that pays no interest until it ends
1
9.0
A bond sold for less than its value that pays no interest and gives the full amount when it ends
Surface Forms
Morphology
The meaning is directly compositional: 'zero' = no, 'coupon' = periodic interest payment on a bond, and 'security' = a financial instrument, so a security with no coupon payments is predictable from the parts. Although financial, the construction follows normal adjective + noun composition and is thus understandable to a learner who knows the constituent terms.
Etymology
Zero coupon security creates a simple picture: a bond with zero coupons — no small interest tickets to collect while you hold it. You buy it at a big discount and later receive the full 'face value' at 'maturity', so it means a security that pays no regular interest but gives one large payment at the end.