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Making the Most of Zeros 
(Source: Personal Finance Advisor by Deloitte & Touche OnLine
October 14, 1996)

Zeros are simple, but their tax treatment isn't.

A zero-coupon security -- known as a "zero" -- is frequently recommended for certain types of investors, especially if the investor wants to lock in a particular interest rate for a specified time period. A prospective investor must understand not only the investment consequences of zeros, including their interest rate and credit risks, but also their relatively complex income tax treatment.

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