discount bond

discount bond definition - finance
  1. A debt instrument, such as a Treasury bond, that has its coupon stripped away from the debt. Thus, no periodic interest is paid. It trades at a discount from its settlement value at maturity.
  2. A bond that sells below its value at maturity because market interest rates are higher than its coupon rate.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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