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What Is a Zero-Coupon Bond?
Looking for investments offering predictable long-term returns, zero-coupon bonds might be a good choice. But what is a zero ...
For example, a 10-year bond that pays interest semi-annually could be stripped into 21 individual zero-coupon securities: 20 ...
When a new bond is issued, the interest rate it pays is called the coupon rate, which is the fixed annual payment expressed as a percentage of the face value. For example, a 5% coupon bond pays $ ...
Alternatively, for every 1% decrease in interest rates, the bond will increase 1% for every year of duration. For example, if interest rates rose by 2%, a 10-year Treasury with a coupon of 3.5% ...
When a Treasury bond is "stripped," to become a Strips, its coupon payments and principal ... received until the security matures. For example, if you purchase Strips at a discounted price of ...