As with most fixed - income securities, zero coupon
bonds offer investors a high degree
of safety when held to maturity and the opportunity to earn
compound interest
over the
life of the
bond.
Study participants were asked five questions covering aspects
of economics and finance encountered in everyday
life, such as
compound interest, inflation, principles relating to risk and diversification, the relationship between
bond prices and interest rates, and the impact that a shorter term can have on total interest payments
over the
life of a mortgage.