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Characteristics of Zero coupon bonds market instrument

State the characteristics of the Zero coupon bonds market instrument.

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Zero coupon bonds are sold at the discount from face value and also do not pay any coupon interest over their life.  At the time of maturity, investor receives full face value.  Other form of zero coupon bonds is the stripped bonds.  A stripped bond is a zero coupon bond which results from stripping the coupons and principal from the coupon bond.  Result is a series of zero coupon bonds which is presented by the individual coupon and principal payments.

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