Discount Bond
Discount Bond definition :
Debt sold for less than its principal value. If a discount bond pays no coupon, it is called a zero coupon bond.
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Discount Bonds
Bonds which may be purchased below par, thereby producing a higher yield to maturity and in most cases, reducing the risk of call.
Pure-discount bond
A bond that will make only one payment of principal and interest. Also called a zero-coupon bond or a single-payment bond. ...
deep discount bond
bond selling for a discount of more than about 20% from its face value.
deep-discount bond - Related Articles
Bond Yield
Calculations
A bond is a certificate that promises to repay a sum of money borrowed, plus interest, on a specified date, usually years into the future.
Bonds Valuation and Interest Rates - Premium or Discount Bonds
If a corporation needs to borrow money to finance its activities, it can do 2 things:
1) Issue new stock to raise capital (equity)
2) Issue bonds to raise money (debt) ...
Discount bond:
A bond that is valued at less than its face amount.
Discount broker: ...
Discount Bond: A bond purchased at an amount significantly less than the face value of the bond. Most common issues are zero-coupon bonds.
Discount Bond
A bond with no coupons, priced below its face value; the return on this bond comes from the difference between its face value and its current price.
Issue date ...
Discount bond: The amount by which a fixed-income security sells below its face amount or par value.
Disposable Income: After-tax income available for spending or saving/investing.
Discount Bond
A bond selling below par; a "Pure" Discount Bond is one without coupon and always sells below par. See also Discount Basis.
Discount Broker ...
Discount bond
Debt sold for less than its principal value. If a discount bond pays no coupon, it is called a zero coupon bond.
Discount broker ...
Discount Bonds
Bonds which sell at a dollar price below par in which case the yield would exceed the coupon rate.
discount bond: Also called a zero coupon bond, a bond that does not pay interest income until it matures.
discount rate: The interest rate charged to member banks that borrow from the nine Federal Reserve Banks.
Discount Bond A bond that sells at value below par value.
Discount Broker Brokerage services provided at a cost lower than full-service brokers.
Deep Discount Bond
A bond that trades substantially below its face value--usually more than 20% from its face value. The term is usually used in reference to zero coupon bonds.
Deep discount bonds:
Created in the 1970s and used by companies seeking to maximize their immediate Cash flow and investors keen to avoid taxation.
Deep discount bond
Deep discount bonds are originally issued with a par value, or face value, of $1,000. But they decline in value by at least 20% - to a market value of $800 or less - typically because interest rates have increased.
Deep Discount Bond. A bond where the market price is less than 20% or so of its face value.
Discount Bond
Bond trading for less than its redemption value.
See: Deep Discount Bond
Discount Broker
A brokerage firm that executes buy and sell orders at lower commission rates than those charged by a full service broker.
Discount bond
A discount bond is a bond sold at a discount from face value. Part of the yield to the investor will come from capital gains that accrue because of the discount.
Discount period ...
See discount bond for reasons why a bond's market value may fall below its face value.
Riddle me this: ...
Deep discount bonds are different from original issue discount bonds, which are sold at less than par value and accumulate interest until maturity, when they can be redeemed for par value.
Deep Discount Bond
A bond with a low coupon rate relative to the current yield.
Defined Contribution Pension Plan ...
Deed of trust See: Indenture Deep-discount bond A bond issued with a very low coupon or no coupon that sells at a price far below par value. A bond that has no coupon is called a zero-coupon bond.
Deep discount bond Bond selling at more than 20% off its face value. Default risk Risk that a particular debtor will fail to make timely payments of interest and principal.
deep discount bond A bond that sells for significantly less than the face amount, ensuring built-in gain if the bond is held until maturity.
See: Indenture
Deep-discount bond
A bond issued with a very low coupon or no coupon that sell at a price far below par value. A bond that has no coupon is called a zero-coupon bond.
Deep in/out of the money ...
Purchasing-power risk Related: inflation risk Pure-discount bond A bond that will make only one payment of principal and interest. Also called a zero-coupon bond or a single-payment bond.
original issue discount bond Zero-coupon bond.
Ostrander, Patsy Manager of a Fidelity Investments junk bond fund who was convicted of accepting illegal compensation from Michael Milken during the 1980s.
OTC Over the counter.
[TMAC] accretion of discount A straight-line accumulation of capital gains on discount bonds in anticipation of being paid par at maturity.
accrued market discount The increase in a Discount Bond.s market value due to its approaching maturity,... accumulated depreciation The net depreciation expense a producing asset has incurred to date. Also known...
Deep-discount bond A bond issued with a very low coupon or no coupon and selling at a price far below par value. When the bond has no coupon, it is called a zero coupon bond.
Corporate taxable equivalent Rate of return required on a par bond to produce the same after-tax yield to maturity that the quoted premium or discount bond would generate.
DEEP DISCOUNT BOND See: Zero coupon bond
DEFAULT The failure of a debtor to make timely payments of interest and principal amounts as they come due or to meet some other provision of a bond, mortgage, lease, or other contract.
Accretion (of a discount) In portfolio accounting, a straight-line accumulation of capital gains on a discount bond in anticipation of receipt of par at maturity.
The yield curve with the smoothest possible forward rate function, consistent with observable data, is closely related to but significantly different from the popular cubic spline approach to the smoothing of both yields and discount bond prices.
Series E bonds are essentially discount bonds; investors receive no interest until the bonds are redeemed. Series H bonds pay interest semiannually.
Current yield does not factor in the price appreciation on a discount bond or the price depreciation on a premium bond that is held to maturity. For a par bond, nominal yield, current yield, and yield to maturity are equal.
A calculation of yield on a bond that takes into account the capital gain on a discount bond or capital loss on a premium bond. In the case of a discount bond, the yield-to-maturity (YTM) is higher than the current yield or the coupon yield.
For example, a pure discount bond that costs $1000 and returns $900 after one year has a negative yield R. A lower bound of zero is imposed to eliminate the possibility of calculating negative interest rates.
Notes:
An original issue discount bond is a bond issued at a price below par. The most extreme example of an OID is a zero coupon bond. OID is considered to be a form of interest, so tax issues can get a bit complicated.
The rise in the market value of a discount bond as it approaches maturity (when it is redeemable at par) and not because of falling market interest rates.
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Personal Finance Glossary ...
It turns out that the time-S value of the T-maturity discount bond has distribution (note the affine term structure here!)
where
Note that their terminal distribution for P(S,T) is distributed log-normally.
ACCRUED MARKET DISCOUNT - The rise in the market value of a discount bond as it approaches maturity (wh...
ACCRUED PAYROLL - a liability arising from employees' salary expense that has been incurred but not pai...
Thus, zero-coupon bonds are a sub-set of the group of DEEP DISCOUNT BONDS. The advantage with this security to an investor is that, he does not have to worry about reinvestment, since there are no periodic inflows.
accretion of discount : A straight-line accumulation of capital gains on discount bonds in anticipation of
being paid par at maturity.
accrual method of accounting : See cash method of accounting.
some of the new financial instruments are Zero coupon bonds, warrants, (detachable warrants secured premium Notes, Stock invest, Bond with floating interest rate, Deep discount bonds, option bonds, option, ...
period is equal to (a) the original semi-annual yield to maturity multiplied by the current book value less (b) the current interest payment. Compare: AMORTIZATION OF PREMIUM. See: COMPOUND ACCRETED VALUE; DISCOUNT; MARKET DISCOUNT BOND; ...
 See also: Banks, Funding, Net present value, Floating Rate, Expense
  
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