These bonds pay the Investor the entire payment at maturity. In order to get the yield, they are traded below face value.  Investors earn return from the compounded interest all paid at maturity, plus the difference between the cost of the bond and its face value.  Zero coupon bonds allow an issuer to avoid or delay the need to generate cash to meet current interest payments and, as a result, may involve greater credit risk than bonds that pay interest currently or in cash.  Some bonds were issued with coupons on them that holders redeemed for interest. Zero-Coupon Bonds also known as accrual bonds, do not have any interest paying coupons attached. Examples of zero-coupon bonds include U.S. Treasury bills, U.S. savings bonds, and long-term zero-coupon bonds.