This has been a guide to what is Zero Coupon Bond. Let's conquer your financial goals together Filed Under: Compare Popular Online Brokers. Essentially, all you have to do is apply the rate of the return to the bond's imputed balance as of the year in question to come up with that year's imputed interest.
The debt balance is raised gradually to the face value and interest of 6 percent is reported each year over the entire period. They are sold at a discount to provide interest to the buyer. The difference between the discounted price and the eventual maturity value represents the interest the investor will earn over the life of the bond, and both for tax purposes and to determine your return, you need to know how to calculate imputed interest on such securities.