A long-term debt instrument selling at a high discount of its face value Deep discount bonds inIndia have been floated by IDBI. These bonds have a period of maturity of 25 years. They have a face value of 1,00,000/- and were sold at 2700
a Bond, which is sold at an issue price, which is substantially below its face value
A bond where the market price is less than 20% or so of its face value. Like a zero coupon bond, the market price of a deep discount bond will rise faster when interest rates fall and drop faster when interest rates rise than a bond that is selling close to its face value.
A bond under which the discount exceeds a certain proportion of the issue price.
A type of bond that is selling below 80 % of its par value.
A bond that has a coupon rate far below rates currently available on investments and whose value is at a significant discount from par value.
Deep discount bonds are originally issued with a par value, or face value, of $1,000. But they decline in value by at least 20% $800 or less typically because interest rates have increased, or because people believe the company may have difficulty making the interest payment or repaying the principal. As a result, investors will no longer pay full price for the bond. Deep discount bonds are different from original issue discount bonds, which are sold at less than par value and accumulate interest until maturity, when they can be redeemed for par value. Zero coupon bonds are an example of original issue discount bonds.
A bond that sells for a discounted price of less than 80% of the face value of the bond.
A bond issued at a very low issue price. Deep discounts have low coupons offering an investor high principal return and low interest income. An extreme example is a zero coupon bond which pays all of its return in principal on the redemption date.
A bond that trades substantially below its face value--usually more than 20% from its face value. The term is usually used in reference to zero coupon bonds. Although original issue discount bonds and deep discount bonds are similar, deep discount bonds are issued at a par value of $1,000. The value of a deep discount bond generally increases faster as interest rates fall and declines faster as rates rise.