How can a zero-coupon bond be useful in funding a future liability, and what specific risks should be considered when doing so?

A zero-coupon bond can be useful in funding a future liability because it provides a known, guaranteed lump-sum payment at a specific maturity date, aligning perfectly with the timing and amount of a future financial obligation. Since it doesn't pay periodic interest, its entire return comes from the difference between the purchase price and the face value received at maturity. This eliminates reinve....