discount bond

Discount bond

Debt sold for less than its principal value. If a discount bond pays no coupon, it is called a zero coupon bond.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Discount Bond

A bond or other debt instrument that is issued at a price below its face value. For example, a bond with par of $10,000 might be issued to an investor for $7000. All zero-coupon bonds are discount bonds.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
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 ?
However, at maturity T, the price of the discount bond D(T, T) [equivalent to] 1 and the price of the contingent claim are given by the payoff V(T, [X.sub.T]) = [psi]([X.sub.T]).
The Treasury sold TRY 3.5bn to the market via the 14-month discount bond and the 10-year fixed-coupon bond auctions yesterday.
investors, by comparison, received a discount bond reflecting a 66.3%
8 August 2011 - The Romanian arm of Turkish finance group Garanti (IST:GARAN) has issued a EUR40m (USD56.7m) discount bond in Turkey, the lender said today.
It is worth noting that, under current rules, the holder of a market discount bond does not have to annually include in gross income the accrued market discount.
(5) Any partial payment of principal on a market discount bond acquired after October 22, 1986, is treated as a payment of market discount and included in income to the extent that market discount has accrued up to that time.
However, the market discount bond rules supersede this general principle.
Not surprisingly, discussions of the terms of the discount bond (a bond issued at less than the principal amount of the debt exchanged) focused on the appropriate percentage of the principal discount and the interest spread; and discussions of the par bond (a bond issued at the same principal amount as the debt exchanged) focused on the applicable initial interest rate and the later step-up of the interest rate.
One-period nominal forward contracts, s periods ahead; these contracts represent a commitment in period t to purchase a one-period nominal discount bond in period t + s at the pre-specified dollar price [Q.sub.t,s.sup.f].
For a discount bond, the basis increases at the rate of the accrued market discount until it reaches the principal value at maturity.