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Discount bond |
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Discount bondDebt sold for less than its principal value. If a discount bond pays no coupon, it is called a zero coupon bond.Discount bond Similar MatchesDiscount factorDiscount factorPresent value of $1 received at a stated future date. Discount rateDiscount rateThe interest rate at which the US Federal Reserve lends money to member banks. Deep discount bondDeep discount bondA bond issued with a very low coupon or no coupon that sell at a price far below par value. A bond that has no coupon is called a zero-coupon bond. Dividend discount modelDividend discount modelA way of valuing a share based on the net present value of the dividends that you expect to receive in the future.The simplest version of the model assumes that the company's dividend rate remains constant. The 'fair' price of the share is the dividend (in pennies per share) divided by the required rate of return. So if you want 10% a year from your shares, the value of a company paying a 7p dividend is 70p. If you think a return of 8% is satisfactory, the value of the same share is 87.5p.A more complex model assumes that the dividends of the company grow at a consistent rate. The fair price to pay is the next dividend divided by the required rate of return minus the rate at which dividends are expected to grow. So if the 7p dividend is expected to grow at 5% per year, an investor requiring an 12% return would value the shares at (7p x 1.05) divided by (0.12 - 0.05)= (7.35p) divided by (0.07)= 105p Pure discount bondPure discount bondA bond that will make only one payment of bond and bond. Also called a bond or a single-payment bond. Further SuggestionsDiscountDiscount securities Accrued market discount Original Issue Discount securities (OIDS) Discount window deep discount Discounting Accretion (of a discount) Accrued discount Dividend Discount Model (DDM) Discount Interest Documented discount notes Volume discount Unamortized bond discount Discount Points Discounted dividend model (DDM) Discount period discounted rate mortgage Forward discount Straight Discount Discounted in or by market discount yield Dividend Discount Return Original issue discount debt (OID debt) Discount payment |
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