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my question is:
1.) do discount bonds have a coupon rate?
2.) do zero coupon bonds have coupon rate? (seems obvious, asking anyway)
3.) besides coupon rate differences (possibly), what else is the difference between them?The terms you are asking about tend not to have exact definitions.Having said that I will try to give the generally understood meanings of the terms.
1)In general terms they do pay coupons.Generally the term applies to bonds issued at a discount on par (face) value of the bond in question.
2)No,they don’t pay coupons.
3)Deep discounted bonds are issued at significant discount on par value.This means that often a significant amount of return comes from redemption and not coupon payments.I am curious about why you are asking this question on F7 forum and not the F9 forum.Aspects of financial instruments will be examined in F7.However, the focus will be on how they are reported in financial statements using applicable accounting standards.Hope this was of some help to you.If you want any more information or help please don’t hesitate to ask.
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