Fedpoint 42: Zero Coupons and STRIPS

• Zero coupon bonds result from the separation of coupons from the body of a security. 
• Zeros sell at deep discounts from face value.
• The difference between the purchase price of the zero and its face value when redeemed is the investor's return.
• Zeros can be purchased from private brokers and dealers, but not from the Federal Reserve or any government agency.

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