Zero-Coupon Bonds: How Returns Work
Summary
Hollow Point Trading shares a short explainer on how zero-coupon bonds can generate potential returns without periodic coupon payments. The example shows a bond purchased for $900 that promises $1,000 at maturity two years later, illustrating the $100 difference before taxes and costs.
https://youtu.be/5ahp8eHoS-g
Zero coupon does not mean zero return #Shorts
Zero coupon does not mean zero potential return. Imagine paying nine hundred dollars for a bond that promises one thousand dollars at maturity two years later. It makes no periodic coupon payments during those two years. If the issuer pays as promised, the difference is one hundred dollars before taxes and costs. Relative to the nine hundred dol...
