Zero – Coupon Bond

The term coupon bond is used to define a bond that features coupons, which must be presented to the user so that interest payments are received by him. It is also called bearer bond. In this type of bond, the issuer does not keep any record of the purchaser and you can’t find any name of the purchaser printed on the certificate. In such bonds, you can find coupons that are attached to them. The owner has to physically detach the coupons from the bond and give them to the paying agents to receive interest payments. In the United States, such bonds were issued since 1982 and so now they hold very less importance. Today, the term coupon bond is mainly used to define those bonds that are yet to be matured. Since, the bearer bond does not contain any ownership information, one who holds it is assumed to be the owner.

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Edited and Updated 31st May 2014

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