If you have been familiar with bonds, company bonds or government bonds, then you know what coupon. The coupon is a kind of profits that you can get if you invest your money in bonds. However, zero-coupon security is stripped bond. It is the regular coupon-paying bond without the coupon. The process of stripping the bond is usually done by a brokerage or a bank.
The brokerage then sells the stripped bond and individual securities. You can buy the zero coupon security with cheaper price and after the maturity period you will get money as much as stated in the bond. This type of business has been practiced for quite long time and there is no significant risk as long as you know what time to buy the zero bond.
The best time to buy the zero coupon is when the interest rates are high because all bonds will be at deeper discounts. To start your business on zero coupon, you can buy it from discount brokers, commercial banks and many other parts. You need to negotiate the price of the zero coupon because the zeros can be bought at huge discounts. However, when the company that issues the zeros declares bankruptcy, you will lose everything.