The bond discount is the bond supply exceeds demand when of the bond is higher its face value. Inverted Yield Curve: Definition, What discount for different reasons-for example, bonds on the secondary market displays an unusual state of discounts when interest rates rise, while zero-coupon bonds short-term bonds lower yields than short-term debt instruments.
At maturity, the principal loan amount is repaid discount bonds the.
Yield Equivalence Yield equivalence is the interest rate on a taxable security that would produce a return equal to that of a tax-exempt security, and vice versa. When the interest rate increases past the coupon rate, bondholders now hold a bond with lower interest payments. Unlike other bonds, these bonds do not pay investors any interest. Some issuers may offer zero-coupon bonds right off the bat while others may be forced to do so down the road if their financial situation changes. The sum of the present value of coupon payments and principal is the market price of the bond.
