bond discount

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Bond discount

The difference by which a bond's market price is lower than its face value. The antithesis of a bond premium, which prevails when the market price of a bond is higher than its face value. See: Original issue discount.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Bond Discount

A situation in which a bond's market value is lower than its face value. Short-term bonds are often issued at a bond discount, especially if they are zero-coupon bonds. However, bonds on the secondary market may trade at a bond discount, which occurs when supply exceeds demand. A bond discount is likely when the issuer has poor or recently downgraded credit, or when current interest rates are higher than the bond's. See also: Unamortized bond discount.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

bond discount

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
I suggested they try to be patient, explaining that the slight rise in interest rates, trading cost of acquiring securities and the significant widening of closed-end municipal bond discounts caused these negative returns, with longer-term returns most likely ending up higher than originally forecasted.<br />I also suggested they look at the last 15 years of quarterly returns for our No.
In light of Florida law prohibiting amortization of bond premiums and not specifically authorizing accretion of bond discounts, trustees may be reluctant to purchase a bond at either a discount or premium (even though trustees may consider such bonds to be excellent investment opportunities).
Example 3a (bond discount): On January 1, 2007, a trustee purchases 100,000 units of Edsel Motor Co.
Bond proceeds in excess of $192 million went to fund $17 million of capitalized interest, $4.5 million of bond insurance and surety fees, and $3 million of bond discounts, as well as reasonable costs of issuance.
The amortization of bond premiums and bond discounts uses the interest method of allocation.
This reviewer would highlight the areas of the book that people in the public sector are concerned about, such as items to consider in the cost of issuance of bonds (bond counsel fees, underwriter's spreads and bond discounts); conventional financing (Letter of Credit, mortgage fees, other fees and charges); and the cost of money through conventional financing.
Note: Receipt of cash does not always represent all of the interest income to be reported for Federal and state income tax purposes; amortization of bond discount is also included.
The annual amount of bond discount amortization is computed using either an effective-interest (constant) method or the straight-line (or ratable) method.