CIMA F2 Syllabus A. Financing capital projects - Other types of bonds - Notes ^{10 / 13}

Deep discount bonds	Zero coupon bonds
Deep discount bonds are bonds or loan notes issued at a price which is at a large discount to the nominal value of the notes, and which will be redeemable at par (or above par) when they eventually mature.	Zero coupon bonds are bonds that are issued at a discount to their redemption value, but no interest is paid on them.
Deep discount bonds will carry a much lower rate of interest than other types of bond. However, the issuer of the bonds will have to pay a much larger amount at maturity than it borrowed when the bonds were issued.	Zero coupon bonds are an extreme form of deep discount bond.