|
(1) A debt instrument, such as a Treasury bill or a coupon or principal payment stripped from sovereign or other debt, that pays no periodic interest but trades at a discount from its ultimate settlement value at maturity. See Zero Coupon Bond (diagram). (2) Any fixed rate bond with a below market coupon. The name comes from the fact that this low yielding instrument will trade at a discount to its par or notional value. (3) A reference to a security selling at less than its theoretically fair or expected value.
|
