It is the best publication we have seen to help investors follow the US Bond markets - and to recommend investments. See the new recommended portfolio section. Zero coupon bonds result from the separation of coupons from the body of a security.
Zeros sell at deep discounts from face value.
The difference between the purchase price of the zero and its face value when redeemed is the investor's return. Zeros can be purchased from private brokers and dealers, but not from the Federal Reserve or any government agency. Creating Zeros by Coupon Stripping Coupon stripping is the act of detaching the interest payment coupons from a note or bond and treating the coupons and the body as separate securities. After stripping, the body and coupons are sold at a deep discount from their face values. An owner benefits only from the difference between the purchase price and the payment received upon sale or at maturity.