A bond that only pays a principal payment at maturity date is known as a:
A) Blank bond.
B) Maturity bond.
C) Interest free bond.
D) Mini-coupon bond.
E) Zero coupon bond.

Question

Quizplus · Accepted Answer

A zero coupon bond is a type of bond that does not pay any interest throughout its life but instead pays the entire principal amount back to the bondholder at maturity. These bonds are typically issued at a deep discount to their face value and provide a way for investors to lock in a specific rate of return.

A Bond That Only Pays a Principal Payment at Maturity