Zingy Zeros

Wall Street's hot bonds

When cocktail-party chatter turns to investments these days, it frequently contains a new buzz word: zeros. Short for zero-coupon bonds, the term refers to certificates that pay no interest for a decade or more but then mature into whopping sums. In just 18 months since the bonds were introduced, Wall Street brokerage firms have sold more than $30 billion. Says Katherine Reed, a bond analyst for Drexel Burnham Lambert: "Zeros are really the rage."

The certificates offer several key attractions. Like U.S. Savings Bonds, zeros sell for less than their...

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