23rd Nov 2009 by Michael Haltman
Like any other fixed income investment, a zero coupon bond will typically be bought from a financial advisor that understands the investors risk profile, as well as their financial needs. Because a zero coupon bond pays no current income yet requires the payment of taxes yearly on the accretion (for taxable bonds), the overall picture of the client needs to be known.
The bonds will be purchased at a discount to maturity value, and will typically be timed to mature when some known need such as college will occur. There are treasury, corporate and municipal zero's, and each persons needs and risk tolerance will dictate in which direction they go.
The financial advisor can find the bonds either in their own firms inventory, or being offered by another firm.
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