Simple Meaning:

A Zero Coupon Bond is a bond that does not pay regular interest (coupon).

Instead, it is issued at a discount (lower price) and repaid at full face value on maturity.
The investor earns profit from the difference between purchase price and maturity value.

Easy Example:

Face Value = ₹1,000

Issue Price = ₹700

Maturity Value = ₹1,000

Investor earns ₹300 after maturity.
There is no periodic interest payment during the term.

Key Features:

No annual interest payment

Issued at deep discount

Redeemed at face value

Suitable for long-term goals

Also called Deep Discount Bond

Formula:

Profit=FaceValue−PurchasePrice
Exam-Friendly Definition:

A Zero Coupon Bond is a debt instrument that does not pay periodic interest and is issued at a discount, with the full face value payable at maturity.

If you want, I can also give:

Accounting treatment (with journal entries)

Tax treatment in India

Difference between zero coupon bond and regular bond (SEO format)