Jul 052020
 

A zero is a type of share or bond. Its key feature is that it pays no annual dividend, or coupon. Instead, the security is issued at a discount to its face value (also known as its par value), but is redeemed (bought back by the issuer) at face or par value. The result is the holder should enjoy a capital gain over the life of the security. This type of instrument is often issued by split-capital investment trusts – some of the shares issued are ‘zeros’ and the rest ‘ordinary’. Zeros are tax efficient – gains are typically taxed at the capital-gains tax rate of 18% – and so can be useful to an investor looking to pay a big future bill such as school fees. But there are risks. If, say, the issuer goes bust, the holder may get nothing back.

More on banking and finance terms later this week, when I write my next post. Zero. Please bookmark us and leave a comment.

Context

Do you have an example of where Zero can be used in context. Help me develop the site by leaving an example below. Every example using ‘Zero’ gets you another entry into the draw for 100 GBP of Amazon vouchers.

A winner will be selected on [date].

 Posted by at 3:10 pm  Tagged with:
Jun 272020
 

See Range Forward.

Join our mailing list or RSS feed for more advice on the meaning of banking terms Zero Cost Collar. And why not leave a comment below?

Context

Do you have an example of where Zero Cost Collar can be used in context. Help me develop the site by leaving an example below. Every example using ‘Zero Cost Collar’ gets you another entry into the draw for 100 GBP of Amazon vouchers.

A winner will be selected on [date].

Jan 032020
 

An interest rate in which all of the interest is paid at the end of a period. e.g. for a two year period the interest would be paid at the end of year two (there would be no interim coupons or cashflows). Alternatively, could be the rate on a zero coupon bond that pays no coupons but is sold at a deep discount to par

Another great day at work and I am feeling satisfied – even a little elated! Tomorrow I’ll write some more on financial terms. Please come back every day and learn something new.

Comments?

Please leave your comments on Zero Coupon Rate below. Remember, every comment gets you another entry into the random prize draw for 100 GBP of Amazon vouchers.

Next winner will be selected on [date]. Comment now!