A debt security with a maturity of one year or less issued at a discount to its face value. For example, if a discount note has a face value of $1,000, it may be issued to the holder at $900. When it matures, the holder receives the full $1,000. A discount note does not pay a coupon; rather, the difference between the discount and the face value takes the place of the coupon. See also: coupon-equivalent yield.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved