where 
if an investor wishes to make a 6 return on a bond with 25 000 par value that is due to mature in three years they will be willing to pay the following if the debtor accepts this offer the bond will be sold to the investor at 20 991 25 000 84 of the face value upon maturity the investor gains 25 000 20 991 4 009 which translates to 6 interest per year the greater the length of time until the bond matures the less the investor pays for it and vice versa the maturity dates on zero coupon bonds are usually long term with initial maturities of at least 10 years these long term maturity dates let investors plan for long range goals such as saving for a child s college education with the bond s deep discount an investor can put up a small amount of money that grows over time zero coupon bonds can be issued from a variety of sources including the u s treasury state and local government entities and corporations most zero coupon bonds trade on the major exchanges 1zero coupon bonds like other bonds are subject to interest rate risk if investors sell them before maturity 4