Zero-Coupon Bond

A bond that pays no interest but is sold at a deep discount.

A zero-coupon bond makes no periodic interest payments. Instead it is issued well below face value and matures at par, with the gain serving as the return. They are highly sensitive to interest rate changes and useful for targeting a specific future lump sum.

She bought a zero-coupon bond at a deep discount, collecting the full face value at maturity instead of interest.