Zero-coupon bonds do not distribute interest during the tenor, but are sold at a significantly discounted price instead. Generally, bonds with a longer tenor feature a higher discount rate, lowering the overall investment costs.
In March 2012, Miss Lee invested in zero-coupon bonds which will mature in March 2018, with a face value of US$200,000 and a discount value of 75.2%.
The Required Principal for Miss Lee to Invest:
US$200,000 x 75.2% = US$150,400
The bond matured at March 2013
Yearly return = 4.86%
Risk Disclosure Statement
The above is an illustration example and only for the ease of your understanding of our products. The actual amount shall depend on the actual amount of investment involved.
The information contained on this page is for reference only. Shanghai Commercial Bank ("the Bank") makes no warranty as to the accuracy or completeness of the information provided herein. It constitutes neither a solicitation nor an offer with respect to the purchase or sale of any security. Bond investments are not bank deposits and involve risks, including the possible loss of the principal amount invested. Investors in bonds denominated in non-local currency should be aware of the risk of exchange rate fluctuations, which may cause a loss of principal. Unless specified, these investments are not obligations of or guaranteed by the Bank. This investment service is not open to US citizens. Bond prices may go down as well as up. The Bank accepts no liability for any direct or consequential loss arising from use of this website. The Bank does not guarantee the existence of a secondary market for bonds.
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