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Zero coupon bonds

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Zero coupon bonds

  • This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.
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  • December 2, 2014 at 6:04 am #215688
    shamaun
    Member
    • Topics: 3
    • Replies: 2
    • ☆

    Hi
    Are zero coupon bonds issued at a discount on their redemption value or on their nominal value? In your notes, it’s issued at a discount on their nominal value but in the examiner’s answer, I found that he wrote redemption value. This is a confusion if you can help me with.
    Thank you.
    Shamaun

    December 2, 2014 at 8:26 am #215757
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    Zero coupon bonds are either issued at a discount, or are repaid at a premium.

    (The end result is effectively the same – you get no interest each year, but there is a big gain made on redemption)

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