The term is a modern financial compound, combining two loanwords with distinct histories. "Zero" traces back to the Arabic concept of 'ṣifr', meaning empty, which entered European mathematics to denote the numerical concept of nothingness. "Coupon" originates from the French for a piece cut off, referring historically to a detachable certificate from a bond. When combined in the late 20th century, the phrase "zero-coupon" creates a logical and literal description for a financial instrument that carries "no" (zero) periodic "interest certificates" (coupons), instead deriving its value purely from the discount between its purchase price and its eventual redemption value.

Structure: zero (none) + coupon (interest certificate) - zero: From Italian 'zero', via Medieval Latin 'zephirum', from Arabic 'ṣifr' (empty, cipher). Functions as a quantifier meaning "none" or "nothing". - coupon: From French 'coupon' (a piece cut off), from Old French 'couper' (to cut). Functions as a noun element referring to a detachable certificate, especially one representing an interest payment.