Amount by which the Market Price of a bond is lower than its Face Value. Outstanding bonds with fixed Coupons go to discounts when market interest rates rise. Discounts are also caused when supply exceeds demand and when a bond's Credit Rating Is reduced. When opposite conditions exist and market price is higher than face value, the difference is termed a bond premium. Premiums also occur when a bond issue with a Call Feature is redeemed prior to maturity and the bondholder is compensated for lost interest. See also Original Issue Discount.
Bond Discount
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 | Discount Bond (business term) |
| Bond Outstanding Method (in accounting) |
| Unamortized Bond Discount (in accounting) |
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 | Financial & Investment Dictionary. Dictionary of Finance and Investment Terms. Copyright © 2006 by Barron's Educational Series, Inc. All rights reserved. Read more |
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Mentioned in
- Discount Bond (business term)
- Bond Outstanding Method (in accounting)
- Unamortized Bond Discount (in accounting)
- Effective Interest Method (in accounting)
- Par Bond (business term)
- Deep Discount Bond (business term)
- Carrying Value (in accounting)
- Contra Account (in accounting)
- Discount (in accounting)
- Income Deduction (in accounting)
- Unamortized Bond Premium (in accounting)
- Valuation Reserve (finance term)
- Interest Method (in accounting)
- Face Value (in accounting)
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