Glossary of Tax Terms

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Zero-Coupon Bond

Zero-Coupon Bond

A bond that has no stated interest rate and is sold at substantially less than its face value. If you buy a zero-coupon bond, every year as it gets closer to maturity the bond increases in value. You pay tax annually on this increase in value, which you recognize as interest income.

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