A zero-coupon bond is a type of debt security that does not pay periodic interest, or coupons, like traditional bonds. Instead, it is sold at a discount to its face value and matures at that full value. The difference between the purchase price and the maturity value represents the investor's return. These bonds are often issued by governments or corporations and can be a useful investment for those looking to save for a specific future expense, such as a child's education or retirement. Since they do not provide regular income, they are typically held until maturity.