Aparna Lucknow, India 601 Questions 0 Answers 0 Best Answers 678 Points View Profile Aparna Asked: October 13, 20212021-10-13T00:42:52+05:30 2021-10-13T00:42:52+05:30In: Economics What are Zero Coupon Bonds? What are Zero Coupon Bonds? banlingcurrent affairs Share Facebook 1 Answer Recent Sagar 31 Questions 177 Answers 34 Best Answers 572 Points View Profile Sagar 2021-10-14T03:00:31+05:30Added an answer on October 14, 2021 at 3:00 am Context: The government has used financial innovation to recapitalize Punjab & Sind Bank by issuing the lender Rs 5,500-crore worth of non-interest-bearing bonds valued at par. About: The special bond for Punjab and Sind Bank comes with 10-15 years of maturity. At the time of maturity, the investor is paid the face value or par value. It is not transferable It is held at the held-to-maturity (HTM) category of the bank as per the RBI guidelines. Though zero-coupon, these bonds are different from traditional zero-coupon bonds on one account — as they are being issued at par, there is no interest. Zero-Coupon Bond A zero-coupon bond is a type of instrument that does not pay any interest to the bondholder. It is also known as a discount bond. It is issued at a discounted rate and not at par value. The return an investor earns is the principal amount plus interest amount. However, these are generally transferable at deep discount rates. Coupon A coupon is an interest the bond issuer pays the bondholder. Coupon payments happen periodically from the time of issuance of the bond until its maturity. 0 Reply Share Share Share on Facebook Share on Twitter Share on WhatsApp Leave an answerCancel replyYou must login or register to add a new answer. Related Questions What is Pathalgadi? What is Bodo Accord?
The government has used financial innovation to recapitalize Punjab & Sind Bank by issuing the lender Rs 5,500-crore worth of non-interest-bearing bonds valued at par.