A zero-coupon bond is a fixed-income security that does not pay periodic interest or coupons to investors but is sold at a discount to its face value, generating returns through capital appreciation at maturity. Zero-coupon bonds are issued with a predetermined face value, maturity date, and yield to maturity (YTM), typically ranging from several months to several years, depending on the issuer's creditworthiness and the bond's terms. Since zero-coupon bonds do not make periodic interest payments, they are sold at a discount to their face value, reflecting the present value of future cash flows discounted at the prevailing market interest rates or yield curve. At maturity, zero-coupon bonds repay the face value to investors, providing a lump-sum payment equivalent to the original investment plus accrued interest, which accrues over time and compounds annually, reflecting the effective yield earned by investors. Zero-coupon bonds are popular among investors seeking predictable long-term returns, portfolio diversification, or tax advantages, as they offer fixed-rate returns, capital preservation, and potential tax deferral or exemption on accrued interest until maturity, making them attractive investment options for retirement planning, education savings, or long-term financial goals.