Zero-Coupon Bond
A zero-coupon bond pays no coupon and one cash flow at maturity — duration equals maturity, and the whole return is pull-to-par plus yield change.
Definition
Zero-Coupon Bond refers to coupon bond pays no coupon and one cash flow at maturity — duration equals maturity, and the whole return is pull-to-par plus yield change. Keep that definition fixed when comparing series, managers, or regimes — renaming the same tape does not create a new signal.
Why it matters
Duration, curve, and carry decide whether a macro view survives into P&L. When coupon bond pays no coupon and one cash flow at maturity — duration equals maturity, and the whole return is pull-to-par plus yield change shifts, related hedges, limits, and narratives usually need an explicit update rather than a quiet assumption.
Case
Suppose a desk is positioned for the opposite of what zero-coupon bond is saying. If coupon bond pays no coupon and one cash flow at maturity — duration equals maturity, and the whole return is pull-to-par plus yield change moves against that book, the first question is not “is the story clever?” but whether size, hedges, and stop logic still match the observation.
How to read it
Always state the tenor and roll-down assumption; parallel-shift shortcuts hide curve risk. Prefer a short written null hypothesis for Zero-Coupon Bond: what would falsify the current reading in the next window?
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