New York - Zero-coupon bonds are bonds that do not pay any interest. Instead, you buy them at a discount to their eventual maturity value. The difference between the discounted price and the maturity value is equal to the interest that you will earn if you hold the bond to maturity.
Zero-coupon bonds are extremely volatile; however, investors should consider owning them if they have the ability to hold them until maturity. They are ideal for college savings and for retirement planning.
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