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- Zero Coupon Bond
A Zero Coupon Bond makes no periodic interest payment, but instead it usually offers discounts on its face value. The earnings accumulate until maturity, when they are redeemed at face value on a specified maturity date.
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- Discounted price at face value
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Illustrative Example of Zero Coupon bond offered at a discount rate
Mr. Chan bought a zero coupon bond of face value of US$100,000 at a discount value of 20%. This bond will mature on February 10, 2028. The required principal for Mr. Chan will be:
| Principal to Invest US$100,000 x 20% = US$20,000 |
Disclaimer:Disclaimer:
This publication is for information and reference purpose only. Citibank (Hong Kong) Limited, Citigroup Inc., or any of its subsidiaries makes no warranty as to the accuracy or completeness of information provided herein. It does not constitute a solicitation, nor an offer with respect to the purchase or sale of any security. Bond investments are not bank deposits and involve risks, including the possible loss of the principal amount invested. Unless specified, these investments are not obligations of, or guaranteed or insured by Citibank (Hong Kong) Limited, Citibank N.A., Citigroup Inc. or any of its affiliates or subsidiaries, or by any local government or insurance agency. Investors investing in bonds denominated in non-local currency should be aware of the risk of exchange rate fluctuations that may cause a loss of principal. Bond prices may go down as well as up. Citibank (Hong Kong) Limited does not guarantee the existence of a secondary market for bonds. Investment products are not available for U.S. persons and might only be applicable to limited jurisdiction.