Accrued Market Discount
The gain in the value of a discount bond expected from holding it for any duration until its maturity. Investopedia Says:
As discount bonds are sold below face value, it is expected that they will gradually rise in market price until reaching maturity.
For example, let's say someone purchases a discount bond with a par value of $1000 for $700. By holding the bond, they can expect a maximum gain of $300. Any appreciation above the $700 paid is called the accrued market discount.
This rise in price is different than that which occurs in regular coupon bonds as a result of lowering interest rates. Related Terms:
Bond
Coupon Bond
Discount Bond
Face Value
Interest Rate
Maturity
Par Value |