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Are deep discounted bonds cheaper(to the company) than conventional loan notes?
Overall no.
The company pays a lower rate of interest than on conventional loan notes, but so that investors will accept the lower interest they get a much higher amount on redemption than the amount originally invested.
The attraction to the company is that they pay much less interest while they are perhaps expanding, but the risk is that the need to make sure they do well enough to be able to afford the repayment on redemption.
I do explain this in my free lectures.
The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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