... the compound interests. Due to the no interest payment until majority zero bonds haven't any coupon sheets. Harter (1993, p.244) mentioned two possibilities for the issuers to create a zero bond: "1. Discounted zero bonds: The bond is issued to cash value, i.e. under principal value, at maturity the principal value is paid back. E.g.: zero bonds of a principal value of 10,000 and 10 ... ,000 , interest rate 6, 5%, run time 5 years, the investors receives 13,701 at maturity."" An advantage is that the investors have to raise less cash when they decide to invest in discounted zero bonds si...

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