What is the closest thing to a zero coupon bond in Australia?
What is the closest thing to a zero coupon bond in Australia?
Bond best answer:
Answer by John W
Imagine buying a three year bond with a face value of $ 1,000 and 10% annual coupons and you take delivery of the bond certificate. If you bought the bond at a bank or the post office, you would receive the physical certificate. If you bought it through a broker, you would have to pay the broker a fee to have the bond certificate mailed out to you. Now you take this certificate home and detach the coupons, if the perforations prove difficult, a pair of scissors would suffice to separate the coupons. You now have four zero coupon bonds, a $ 100 face value one year zero coupon bond, a $ 100 face value two year zero coupon bond, a $ 100 face value three year zero coupon bond and a $ 1,000 face value three year zero coupon bond.
So to answer your question, the closest thing to a zero coupon bond in Australia would be a zero coupon bond. Mind you it may be a little more difficult if you don't have scissors down under.
Bond
PJ Bond @ Fest 10 - 10.28.11-49
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PJ Bond plays the Civic Media Center for Fest 10, Gainesville, FL, October 28, 2011.
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