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discount bond

   Also found in: Wikipedia 0.04 sec.
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 bond
A bond selling at a price that is less than its par value. In addition to semiannual interest payments, a discount bond offers investors additional appreciation if the security is held until maturity.


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This is natural, in that hL is the risk neutral mean-loss rate of the defaultable discount bond due to default.
Debt instruments that qualify as inflation-indexed debt will be subject to one of two methods to account for qualified stated interest and original issue discount (OID) on the instrument: the coupon bond method or the discount bond method.
However, the gain on the sale or redemption of market discount bonds acquired after April 30, 1993 is taxed as ordinary income to the extent of the accrued market discount.
 
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