Retain an original issue discount, or OID, for tax reasons.
If a 2,000 bond is given as a gift, hornymatches scam the giver uses only 2,000 of his yearly gift tax exclusion, and the recipient receives more than 2,000 once the bond reaches maturity.The lack of availability of inflation-indexed zeroes, however, limits the utility of this property to satisfying only known, fixed, future obligations valued in nominal dollars.Vanguard offers an index fund, the Extended Duration Treasury Index Fund, based on the Barclays.S.References External links sex offender registry kingston ontario Papers).They also cannot be used to gain greater exposure to interest rate shifts (e.g.In other words, a zero-coupon bond gains from the difference between the purchase price and the face value, while the coupon bond gains from the regular distribution of interest.Take a look at zero coupon bonds.The longer the maturity, the greater the price sensitivity.For one group, the absolute certainty of receiving a fixed amount on a fixed date in the future is extremely valuable.Zero-coupon bonds are purchased at a large discount, known as deep discount, to the face value of the bond.
Yet some bonds are structured specifically not to pay income currently.Image source: Getty Images.If you bought the zero-coupon bond for 952.38, you would receive 1,000 at maturity, which is a gain of 5 (47.62/952.38).Zero-coupon bonds that are considered short-term investments typically have a maturity that is no more than one year.Treasury strips 2030 Year Equal Par Bond Index.Therefore, if you want to bet on interest rates moving a particular direction, zero coupon bonds are your best way to maximize profit from any given rate move.Americas, europe, asia Pacific, explore Products, try or Buy.

Because all of the return of a zero coupon bond gets incorporated into its price, changes in rates have a more dramatic impact on zero coupon bond prices than with their interest-paying counterparts.