Pure discount bond


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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.
References in periodicals archive ?
Note that the rate we refer to is the rate of return associated with a 90-day pure discount bond that pays $100 at maturity.
The modem theory of the term structure of interest rates prices a coupon bond in three steps: 1) viewing the coupon bond as a bundle of pure discount bonds; 2) unbundling it into the constituent pure discount bonds and valuing these components; and 3) adding up the values of the components to attain the value of the bundle.
8) The left-hand side of equation 3 is the real value of the interest bearing debt at the end of period t, determined by multiplying the number of time t + j dollars that the government has sold in the form of j period pure discount bonds, [s.
7 We use the yield to maturity series for pure discount bonds constructed by McCulloch (1990) and McCulloch and Kwon (1993).
0], which generalize the T-year pure discount bond case described in the introduction.
Let P(t,s) denote the price at time t of a pure discount bond paying one at time s, t [is less than or equal to] s.
For a one-unit T-year default-free pure discount bond, if {[y.