Answer :
A bond that has only one payment, which occurs at maturity, defines zero-coupon bonds.
Define zero-coupon bonds.
Bonds with zero coupon rates are those that bear no interest over their entire lifespan. Instead, buyers purchase zero-coupon bonds at a significant discount to face value, which represents the sum the buyer will get when the bond "matures" or becomes due.
Regular bonds, also known as coupon bonds, pay interest throughout the bond's life and then return the principal at maturity. A zero-coupon bond does not pay interest; instead, it trades at a significant discount, which results in a profit for the investor when the bond is redeemed for its full face value at maturity.
Comparing Zero-Coupon Bonds to other fixed-income financial vehicles, they show to be a safer choice. They provide substantial yields when they mature, and there is the possibility to sell them in secondary markets if interest rates drop significantly.
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