Also found in: Dictionary, Acronyms.
A bond issued with a very low coupon or no coupon that sells at a price far below par value. A bond that has no coupon is called a zero-coupon bond.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
Deep Discount Bond
A bond or other debt instrument that is issued at a price far below its face value. For example, a bond with par of $10,000 might be issued to an investor for $5,000. Junk bonds are often deep-discount bonds.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
1. A long-term debt security that, because of a low coupon rate of interest compared with current rates of interest, sells at a substantial discount from face value. Bonds of this type, if not originalissue discounts, are preferred by some investors because they are unlikely to be called before maturity. See also municipal convertible, zero-coupon bond.
2. See original-issue discount bond.
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.