deep discount bond definition

deep discount bond

Bond trading at a discount of 20 percent or more of its par value. It is a common occurrence with zero-coupon bonds, but may also happen with interest bearing bonds for reasons such as too low an interest rate or a sudden plunge in the bond issuer's credit rating. Deep discount bonds appreciate faster than other types of bonds when market interest rates fall, and depreciate faster when the rates rise.

deep discount bond is in the Banking, Commerce & Finance, Investing and Securities & Futures Trading subjects.

deep discount bond appears in the definition of the following term: zero-coupon bond

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