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Up31
A 9-year $1,000 bond that pays no coupon is trading at $591.89 with a yield of 6%. It would least likely be referred to as a:
- A. couponless bond.
- B. zero-coupon bond.
- C. pure discount bond.
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Up3Can someone explain the difference between pure discount and zero-coupon bonds, pretty please?
zero coupon bonds are issued at discount, so the discount is actually the interest u earn while u hold the bond till the maturity
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Up2
The correct answer is Option A.
Bonds that pay no coupon prior to maturity are called zero-coupon bonds or pure discount bonds. These bonds are sold at a discount to their par value and the entire discount is considered interest, which, while earned each year, is all paid at maturity when the bondholder receives the par value.
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Up1
Can someone explain the difference between pure discount and zero-coupon bonds, pretty please?
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