ZERO COUPON BONDS Definition

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ZERO COUPON BONDS are bonds priced at a large discount from face value. The bonds mature at full face value so the difference between the original issue price and the face value represents interest income. The issuer of the zero coupon bond saves on cash flow since the interest isnt paid out until the end of the bond holding period.

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YEAR-END DIVIDEND is a payment to stockholders from retained earnings, declared at the end to a business year.

BASIS POINTS is 0.01% in yield. For example, in increasing from 5.00% to 5.05%, the yield increases by five basis points.

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