what is a zero coupon certificate of deposit cd 
a zero coupon certificate of deposit cd is a type of cd that does not pay interest during its term instead zero coupon cds provide a return by being sold for less than their face value this means that an investor would receive more than their initial investment once the cd reaches its maturity date this provides the investor with a return on investment roi even though no interest payments were made prior to the maturity date by contrast traditional cds pay interest periodically throughout their term usually on an annual basis both zero coupon cds and regular cds are popular options among risk averse investors because they offer guaranteed principal protection zero coupon cds however may be especially attractive for investors who are not particularly concerned with generating cashflow during the investment term 