Original Issue Discount

Business / Taxes / Original Issue Discount: A bond or other debt security that is issued at less than par but can be redeemed for full par value at maturity is an original issue discount security. The appeal, from an investor's perspective, is being able to invest less up front while anticipating full repayment later on. Issuers like these securities as well because they don't have to pay periodic interest. Instead, the interest accrues during the term of the bond so that the total interest when combined with the principal equals the full par value at maturity. Zero-coupon bonds are a popular type of original issue discount security. The drawback, from the investor’s perspective is that the imputed interest that accumulates is taxable each year even though that interest has not been paid. The exceptions are interest on municipal zero-coupons, which are tax exempt, or on zeros held in a tax-deferred or tax-exempt accounts.

Other Words for Discount

Discount Adjective Synonyms: reduce, mark down, deduct, lower, take or knock off
Discount Verb Synonyms: diminish, lessen, minimize, detract from
MORE

Other Words for Issue

Issue Noun Synonyms: point, topic, subject, matter, affair, problem, question
Issue Adjective Synonyms: outflow, outgoing, exit, egress, issuance, emanation, efflux, debouchment, emergence, outlet
MORE

Other Words for Original

Original Adjective Synonyms: master, actual, primary, authentic, true, genuine, real, basic, prototypic(al), archetypal, source
Original Noun Synonyms: initial, first, earliest, primary, beginning, starting, basic
MORE

Deep Discount Bond

Business / Taxes / Deep Discount Bond: Deep discount bonds are originally issued with a par value, or face value, of $1,000. But they decline in value by at least 20% — to a market value of $800 or less — typically because interest rat MORE

Discount

Business / Accounting / Discount: The amount charged by a financial institution when a note receivable is discounted: calculated as maturity value times discount rate times discount period. MORE

Bond Discount

Business / Accounting / Bond Discount: The difference between the face value and the sales price when bonds are sold below their face value. MORE

Links
Home
Glossary
Thesaurus