accrued market discount

Accrued Market Discount

The gain in the value of a discount bond expected from holding it for any duration until its maturity.

Notes:

As discount bonds are sold below face value, it is expected that they will gradually rise in market price until reaching maturity.
For example, let's say someone purchases a discount bond with a par value of $1000 for $700. By holding the bond, they can expect a maximum gain of $300. Any appreciation above the $700 paid is called the accrued market discount.
This rise in price is different than that which occurs in regular coupon bonds as a result of lowering interest rates.

See also: Bond, Coupon Bond, Discount Bond, Face Value, Interest Rate, Maturity, Par Value

---

Accrued market discount

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.

---

accrued market discount

The gain in the value of a bond that occurs because the bond has been bought at a discount from face value. For example, a $1,000 par bond maturing in ten years and selling at $800 can be expected to rise gradually in price throughout its remaining life. The accrued market discount is the portion of any price rise caused by the gradual increase (as opposed to an increase caused by a fall in interest rates).