A non-interest-bearing bond is a bond that does not provide regular interest payments to the bondholder. Instead, it is sold at a discount to its face value and the bondholder receives the full face value when it matures. This allows the bondholder to earn a return on the investment by purchasing the bond at a discount and receiving the full face value at maturity. The term “non-interfui” is a Latin phrase meaning “I was not present” and is commonly used in a reporter’s note.
A non-interest-bearing bond is a type of bond that does not provide any interest payments to the bondholder. Instead, it is sold at a discount to its face value, and the bondholder receives the full face value of the bond when it reaches maturity. For instance, a company might issue a $1,000 non-interest-bearing bond that matures in five years. The bond could be sold at a discount for $900, but upon maturity, the bondholder will receive the full $1,000. Another example is a U.S. Savings Bond, which is a type of non-interest-bearing bond issued by the U.S. government. These bonds are sold at a discount, and the bondholder receives the full face value of the bond when it matures. Non-interest-bearing bonds are appealing to investors seeking a low-risk investment with a guaranteed return. However, because they do not generate any interest, they may not be suitable for investors seeking regular income from their investments.
A non-interest-bearing bond is a type of bond that does not pay periodic interest payments to the bondholder.
Instead of paying interest, the bond is sold at a discount to its face value and the bondholder receives the full face value of the bond at maturity.
Non-interest-bearing bonds can provide a tax advantage as the bondholder does not have to pay taxes on the interest income. They can also be a good option for investors who are looking for a long-term investment.
The main risk associated with non-interest-bearing bonds is inflation risk. As the bond does not pay interest, the bondholder may not be able to keep up with inflation.
Yes, non-interest-bearing bonds can be traded on the secondary market.
Non-interest-bearing bonds are taxed at the time of maturity, when the bondholder receives the full face value of the bond.
Yes, governments can issue non-interest-bearing bonds as a way to finance their operations.
Non-interest-bearing bonds can be a good investment for retirees who are looking for a long-term investment and want to avoid paying taxes on interest income.
A zero-coupon bond is a type of bond that does not pay interest but is sold at a discount to its face value. The bondholder receives the full face value of the bond at maturity.
No, non-interest-bearing bonds cannot be converted into interest-bearing bonds.
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This glossary post was last updated: 17th April 2024.
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