Debt sold for less than its principal value. If a discount bond pays no coupon, it is called a zero coupon bond.
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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.
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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.