2oii0r2017 ‘Accrued Market Discount Accrued Market Discount DEFINITION of ‘Accrued Market Discount’ ‘The gain in the value of discount bond expected from holdingit for any duration until its maturity, Because discount bonds are sold below face value, it is expected that they wll gradually rise in ‘market price until reaching maturity. Te difference between the discounted price for which the bond is sold and its face value at maturty represents the return on investment tothe bondholder ‘and may be taxable atthe federal, state and/or loca level BREAKING DOWN ‘Accrued Market Discount’ ‘Suppose an investor purchases a discount bond with a par value of $1,000 for $700. By holding the bond the investor can expecta maximum gain of $300, Any appreciation above the $700 paid is called the accrued market discount. This rise in priceis diferent than that which occurs in regular ‘coupon bonds asa resutofloweringinterest rates. Trading Center Become A Day Trader In Less Than A Day “Through Investopedia Academy/s Become ADay Trader an experienced Wall Street trader willteach you proven, profitable strategies you can start using today After this self-paced, on-demand course you'll understand money management and trading psychology, speak the language of the market, | ‘and use six proitiable, tried-and-true trading techniques. Watch Free Traller>> Discount Bond Video Definition ‘Abond thats issued fo less than its parl{oxing)valpy pra bond currently trading for ess than its par valuein the secondary market. A ond is considered a discount bond when it has a lower interest rate than the current market rate, and consequently i sold ata lower price. This interest rate also ‘called a coupon, i usually paid semiannually. Asinterest rates go up, Bond prices go down. Discount bonds are similar to zero-coupon bonds, which are also sold ata discount, but the difference is that they don't pay interest. A common example of discount bond isa US. savings bond, ‘Adeep-ciscount bond is sold ata significantly lower price than par value, usually 20% or more. hitp:wwwinvestopedia.comitermslalaccruedmarketdscount asp 1220/0/2017 ‘Accrued Market Discount Read More+ Serchneopeds ces Toms os Guide Shbshos FAQS Colts Chaeear Skins SockSinutor Plead GamPrepQuner NetWertCletor ws (©2017 iesoped LC ARghsReend | TemsOfike | Pac Pley hitp:wwwinvestopedia.comtermslalaccruedmarketdscount asp vow x CONNECT WITH N f vin GET FREE NE 22