Ghanaian legal luminary and law lecturer at the University of Florida, Professor Stephen Kwaku Asare popularly known as Kwaku Azar has on today taken leading member of the ruling New Patriotic Party ( NPP), Gabby Darko Otchere through some economic lessons.
Gabby Otchere had posted on social media, questioning his followers what zero coupon is?
” From today, we all have to do some economic lessons.
What is zero coupon rare?” He quizzed in his social media post.
However, the law lecturer and Governance critique responding to the politician’s question stated that there is no zero coupon rate as asked by him but zero coupon note or bond.
Explaining what zero coupon note means, the professor stressed out that it does not mean zero interest but has no coupon rate.
According to him, there is still a future cash outflow associated with it which of course differs from the initial borrowing.
Making a case study, Mr Azar pointed out that it is as people usually say in Accra, free today, pay tomorrow.
” There is no zero coupon rate. But there is a zero coupon note or bond.
A zero coupon does not mean zero interest. It only means it has no coupon rate. There is still a future cash outflow associated with it, which of course differs from the initial borrowing. Therein lies the interest, which can be obtained easily by PV computation.
As we say in Accra, free today pay tomorrow” Kwaku Azar wrote.
